Idaho Power, a Boise, Idaho-based utility, is considering entering its first Treasury lock, in order to guarantee low interest rates in anticipation of a potential refinancing of a bond. Dennis Gribble, assistant treasurer, noted that with an apparent upturn in the U.S. economy possible interest-rate hikes are on the horizon. The risk of any rate rise could be offset by entering a Treasury lock, he said. Idaho is considering refinancing an outstanding USD50 million bond, which is callable next December and any Treasury lock would be executed in anticipation of this sale, he said.
The bond, which is a tax-exempt pollution control issue, at present pays a coupon of 8.3%, however if this were to be refinanced today it could be reduced to 4-5%, said Gribble. Idaho Power has began talks with firms about entering a potential lock, although has not yet made any decisions, noted Gribble. Any counterparty to the lock would be selected according to several criteria including price and relationship, he said.
