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Deutsche Bank Trades Exelon As Project Bids Rise

Deutsche Bank traded a total of $57 million of Boston Generating's debt at 95-97 in two trades last week.

Deutsche Bank traded a total of $57 million of Boston Generating's debt at 95-97 in two trades last week. The $1.25 billion bank deal, known as Exelon Boston, has climbed from the 70s this year. According to a dealer, the sellers decided the price was aggressive and they were trying to get out. Power projects trade sporadically, so whenever an opportunity comes along, investors tend to be very aggressive in their bids, he added. Deutsche Bank officials declined comment.

A sale of Exelon Boston's 3000 MW merchant portfolio of plants is currently ongoing. A second trader said there is increased optimism over the potential price of the assets. The sale process was initiated last July after Exelon Corp. transferred ownership of its wholly-owned subsidiary Exelon Boston to 19 lenders (LMW, 3/8).

The trades were completed despite rumblings that some original lenders wanting to sell exposure have been dealing with some resistance from agent bank BNP Paribas. Dealers said the agent was not eager to process transfers as it did not want new investors in the deal, fearing they would disrupt the sales process. Kate Quinn, a director at BNP Paribas, disagreed strongly and said the lenders set up a special purposes vehicle to take title to the asset on May 25. Exelon Boston's debt is stapled to the equity, so debt and equity do not trade separately, she explained. The transfer of the equity is regulated by the Federal Energy Regulatory Commission. The equity is a federal regulated asset, therefore, only can be traded under circumstances that are consistent with the requirements of the FERC, she noted. Robert Shapard, executive v.p. and cfo of Exelon Corp., did not return calls.

A mix ofLa Paloma Generating 1121 MW merchant gas-fired project debt also traded in the 94 1/2-95 range. The piece traded up though it is considered one of the lowest quality assets, a third trader noted. A higher than expected valuation attributed to power plant Lake Road is the underlying reason, a market participant said. La Paloma, was originally sponsored by theNational Energy & Gas Transmission but the plant was turned over to lenders last September (11/8). Lake Road is reportedly being sold to buyout firm U.S. Power Generating Co.

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