) subsidiary PECO Energy Company ("PECO") announced that it has
priced two series of the first mortgage bonds, worth $550
million. The first series comprises $300 million bonds yielding
annual interest of 1.20% and maturing on Oct 15, 2016, while the
second series consists of $250 million bonds yielding 4.80%
interest per year and maturing on Oct 15, 2043. The offering will
close on Sep 23.
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PECO will utilize a portion of the net proceeds to pay the
aggregate principal amount of its 5.60% first mortgage bonds,
worth $300 million, due on Oct 15, 2013. The rest will be
utilized for general corporate purposes.
PECO is issuing new bonds with a lower coupon rate to lower its
cost of capital and extend its debt repayment burden.
Exelon and its subsidiaries issue bonds and notes from time to
time to refinance debts. In Mar 2009, PECO sold the first and
refunding mortgage bonds, worth $250 million with a coupon rate
of 5%. Recently, Exelon's another subsidiary Commonwealth Edison
Company priced its 4.60% first mortgage bonds, worth $350
million. The bonds will mature on Aug 15, 2043. In both cases,
the company utilized the net proceeds to refinance debts and used
the rest for general corporate purposes.
We appreciate Exelon's continuous effort towards minimization of
debt burden. The company issues senior notes and bonds to pay-off
its existing debts. Exelon's long-term debt as of Jun 30, 2013
was $16.1 billion, down from $17.2 billion at the end of Dec 31,
2012. As of Jun 30, 2013, Exelon's cash balance was $1.0 billion
and cash provided by operating activities during the first six
months of 2013 was $1.2 billion. A strong financial position will
enable the company to pay additional interest, resulting from the
current bond offering.
Exelon currently has a Zacks Rank #3 (Hold). However, other
stocks in the industry that are worth considering include
Huaneng Power International, Inc.
) with a Zacks Rank #1 (Strong Buy), and
), each with a Zacks Rank #2 (Buy).
Chicago, Ill-based Exelon engages in generation, transmission,
distribution and sale of electricity to the residential,
commercial, industrial and wholesale customers.