Corporate unbundling: Are we ready yet? A bondholder`s primer
This article reviews the effects of vertical divestiture on electric utility bondholders. It is felt that generation, transmission, and distribution eventually will be in separate hands, but then how are the first mortgage bonds that provided financing for the aggregate to be unbundled? Though essentially all utility plant and equipment is pledged as security for the bonds, the bonding rations range fom 60% to 75%, thus leaving between one- and two-thirds of the utility property as excess collateral. This would appear to provide some financing lattitude, but problems arise when a property release and replacement undermines bondholder security. Many utilities are exploring the conversion of First Mortgage Bonds to debentures, which would allow greater flexibility in dealing with the debt.
- OSTI ID:
- 381252
- Journal Information:
- Fortnightly, Vol. 134, Issue 11; Other Information: PBD: 1 Jun 1996
- Country of Publication:
- United States
- Language:
- English
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