July 29, 2015
Saber Partners to Advise Florida Regulators on $1.3 Billion Duke Energy Deal
The Florida Public Service Commission has selected Saber Partners, LLC to advise it on financing transactions arising from a new Florida law. The law authorizes the Commission to allow Florida investor-owned utilities to issue, subject to Commission oversight, a special type of bond commonly called a “securitization bond” or “rate reduction bond” to recover costs associated with closing nuclear power plants.
Duke Energy (NYSE: DUK) became the first utility to apply to issue these new bonds when it filed with the Commission a petition on Monday, July 27, to issue approximately $1.3 billion of bonds.
“This special type of bond offers investors the safest form of investment possible in the capital markets,” said Joseph S. Fichera, Saber’s CEO. “They should have yields only slightly higher than US Treasuries and US Agency bonds,” he added.
The bonds are expected to achieve a top AAA credit rating and, if properly structured and marketed to investors, will save electric utility customers hundreds of millions of dollars. This is the second time the Florida Commission has chosen Saber Partners as its financial advisor on a new type of corporate utility security offering.
Saber was the unanimous recommendation of the Commission’s independent evaluation team after Saber and other top financial advisors responded to the Commission’s Request for Proposals. Saber was the number one choice in all categories: Qualifications, Experience, Scope of Services, References and Compensation – and received an overall score of 97%.
“We are honored to be chosen again in a tough, competitive selection process from such a distinguished group of advisors,” said Fichera.
In 2005, through another competitive process, Saber Partners was also that independent panel’s unanimous first choice. The 2005-2007 assignment assisted the Commission on the nation’s first “hurricane-recovery securitization” for Florida Power & Light (NYSE: NEE). The 2007 bond offering had the lowest credit spreads over market benchmarks of any other electric utility securitization offering, and it was the first to be sold by competitive bidding also saving ratepayers hundreds of millions of dollars.
Mr. Fichera emphasized the safety and value of the potential bond offering for Duke Energy, saying, “When presented properly to investors, they will recognize the bonds’ value relative to the highest quality corporate or government bonds.”
“The Florida legislature has again shown leadership in providing a way to lower customers’ costs associated with expensive nuclear plant decommissioning actions. This new type of bond and financing structure has application nationwide,” Fichera concluded.
Mr. Fichera and Saber Partners have been the financial advisor to 7 different state regulatory commissions on approximately $8 billion in securitizations, in 12 SEC registered public offerings, over 14 years. The firm has worked with 8 different investor-owned utilities and 30 different underwriters to achieve the lowest cost of funds possible for ratepayers at the time of those bond offerings. In addition to Mr. Fichera, the Saber team includes Michael Noël, Paul Sutherland, Brian Maher, Becky Klein and Hyman Schoenblum
To review the Commission’s Independent Evaluation Committee’s specific scoring of Saber Partners and others, click “Evaluation Sheet.”
Peter Barden: (917) 763-7352