In the News: Recent Developments

Oct 13, 2005

Lehman, Credit Suisse, RBS Hired to Lead CenterPoint Debt Sale

By Darrell Preston

Lehman Brothers Holdings Inc., Credit Suisse Group and Royal Bank of Scotland were hired to lead banks in selling as much as $1.8 billion of bonds for CenterPoint Energy Inc. backed by a surcharge on electric bills.

CenterPoint, the second-largest Texas power distributor, and Saber Partners, a financial adviser hired by the state to oversee the sale, picked the three investment banks following a request for information from interested underwriters sent out in August, said Darryl Tietjen, director of financial review for the Texas Public Utility Commission.

“We are confident we will have the bonds on the market by the end of the year,” said CenterPoint spokesman Floyd LeBlanc.” It’s moving forward.”

CenterPoint wants to sell top-rated debt to recover its investment from before Texas deregulated its retail electric utility market in 2002. Under the state law that deregulated the industry, Houston-based CenterPoint and other utilities in Texas such as American Electric Power Inc.’s Texas Central Co. and TNP Enterprise Inc.’s Texas New Mexico Power Co. can issue bonds backed by customer billings at a low interest rate to make up these so-called stranded costs.

Fifteen underwriters applied to lead banks on the CenterPoint sale, said Joseph Fichera, chief executive of New York-based Saber. Under state law and CenterPoint’s financing order approved by the state utility commission in March, the financial adviser must certify that the underwriters sold the debt at the lowest interest rates on the day of the sale.

CenterPoint and Saber still must hire co-managers to the team that will sell the bonds, Tietjen said in a telephone interview from Austin.

TXU Corp. and other Texas utilities already have sold $2.8 billion of the stranded-cost debt, which is backed by a state promise to set electric rates high enough to repay investors.

–With reporting by Eileen O’Grady in Houston. Editor: Williams.
To contact the reporter on this story:
Darrell Preston in Dallas at (1)(214) 954-9454 or

To contact the editor responsible for this story:
Beth Williams in New York at (1) (212) 318-2307 or at

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