Deutsche Bank scooped up $25 million of Boston Generating's Exelon Boston and Bear Stearns reportedly snared $25 million of Lake Road project debt during auctions last week. The assets in both plants have been transferred to the lenders. "The [sellers] are banks owning loans trying to get cents on the dollar," said a trader on a distressed desk. "The banks are not really in the business of owning loans trying to get equity-like returns," he added. Also, "It's year end. A lot of banks have this stuff on their books at lower levels and this is a good time to sell out," he concluded.
Exelon Boston was sold by one of the original lenders of the $1.25 billion credit, said a trader. The purchase price was around 101 1/2. This was only basis points away from the cover bid, a second trader said. Three weeks ago, Deutsche Bank traded a total of $57 million of Exelon Boston at 95-97. Deutsche Bank officials declined comment.
Meanwhile, market players pointed fingers at Bear Stearns as the buyer of the Lake Road piece at around 82. The project's bank debt was quoted in the mid-50s in July. The 780 MW plant has $490 million of bank debt. National Energy & Gas Transmission (NEGT) transferred ownership of the plant to lenders last fall and is under contract to be sold to Jay Worenklein'sUS Power Generating Co. Bear Stearns officials declined comment.
The sale of Exelon Boston's 3000 MW merchant portfolio was initiated last July and is currently ongoing. The process started after former parent Exelon Corp. transferred ownership of its wholly owned subsidiary to lenders (LMW, 3/8).
The BNP Paribas-led Exelon Boston deal has climbed from the 70s this year. "The bids are higher than the actual value of the plants," a different trader noted. Two weeks ago, traders were complaining about the processing of trades in the name (LMW, 12/6). An Exelon spokesman referred questions to the lenders. An NEGT spokeswoman did not return calls.
