Strong Earnings Bolster PG&E Paper
An estimated $20 million of Pacific Gas & Electric's bank debt traded in the 93 5/8 range early this week on news of the company's third-quarter earnings more than tripling. The company also reported that its utility unit, which has filed for bankruptcy-court protection, has cash holdings of $4.3 billion. Still, market players remain wary of how the company will hold up as California's economy suffers and questions remain about the stability of future utility rates. Also, San Francisco was voting last week as LMW went to press on whether to create a municipal power district. If approved, PG&E would lose 8% of its customer base. The utility company is based in San Francisco, Calif.
The debt traded heavily early last month and had notched up to 86-87, up from 82 ½, on improving utility costs (LMW, 10/07). Market players noted the state had regulated what had been an initial spike in energy prices, in turn helping the utilities manage their expenses and keep them in line with end-user costs. PG&E has a $1 billion deal that breaks down into two tranches and expires in 2003. Pricing is LIBOR plus 4%. Lehman Brothers and GE Capital are the lead arrangers, according to Capital DATA Loanware.