$23 million nominal/$17 million present value savings to Texas electricity customers! That is what Citigroup concluded in their independent analysis of Saber Partners’ efforts in Texas.
Citigroup investment bankers analyzed the first three Texas utility securitization bond offerings between 2001-03 where Saber Partners, LLC served as the Financial Advisor to the Public Utility Commission of Texas (our client). Saber Partners was a joint-decision maker with the utility in the structure, marketing and pricing of the bonds as defined by the Public Utility Commission of Texas’ financing order. Each bond issue’s interest rates and credit spreads to benchmark rates for each series was compared to all other similar AAA-rated investor-owned utility securitization bond offerings in other states. Texas electricity customers repay the bonds through a special charge on their monthly electric bills. The charge could last for up to 15 years.
The Citigroup analysis focused on whether the credit spread (or the interest rate above a benchmark interest rate measured in basis points or increments of 0.001%) was higher or lower than other deals where Saber Partners and active commission oversight was not involved. The lower the spread, the more savings to Texas electricity customers.
Citigroup’s conclusion: the three Saber Partners deals with active commission oversight and Saber Partners as a joint decision maker were consistently lower in cost especially on the longer maturities which are more expensive to ratepayers.
Thank you, Citigroup for the analysis and for showing that hard work results in ratepayer savings!!
Read the Citigroup email demonstrating Saber Savings in Texas Ratepayer-Backed Bond / transition Bonds
Citigroup’s study was confirmed in 2005 by an independent study by Barclays Capital. Bankers at Barclays examined all utility securitization / Ratepayer-Backed Bonds credit spreads to benchmark swap rates achieved by bonds offered for New Jersey utilities versus Texas utilities versus utilities in all other states.
See the Barclays May 2005 analysis here on pages 24-25. Used with permission for development of Saber Partners business and franchise.