Wednesday, November 14, 2007

Bad Credit

Santee Cooper Preps Bonds To Fund Coal Units
The South Carolina Public Service Authority, also known as Santee Cooper, plans to sell $340 million in tax-free bonds to bankroll developments, including its planned 600 MW Pee Dee and 580 MW Cross Unit 4 coal-fired facilities. About 70% of the utility's debt is tax-exempt, says Jeff Armfield, treasurer in Moncks Corner, S.C., which it can issue by virtue of being state-owned.
About $196 million will go toward the Cross Unit 4, now under construction and expected to come onl ine 2009 at an existing pulverized coal facility in Berkeley County. About $60 million will be spent on preliminary work for Pee Dee near Kingsburg, withconstruction beginning sometime next year. A further $28 million will be used for environmental studies and the remainder on general corporate purposes. The sale will be split in two to target investors with different appetites.
The retail bo nd piece is set for July 17 and the sale to institutional investors for July 18. Armfield says the notes should land coupons in the 5% range, and may be priced slightly higher on the retail side where investors are hungrier for yield. Serial maturities ranging from one to 20 years make up $191 million of the offering. A $50 million 25-year tranche, $46 million 30-year tranche and $39 million 35-year tranche round out the issue.
Citigroup and Goldman Sachs are leads managers, with co-managers Bear Stearns, Merrill Lynch and Morgan Stanley. Santee Cooper recently went through a process of evaluating existing relationship banks and potential new ones, which Armfield says he had wanted to do for the past few years to make sure it was using the most effective configuration. However, it ended up sticking with the same group. The notes are rated Aa by Moody's Investors Service.

2 comments:

bruce said...

Does anyone know what the situation would be for obtaining corporate surety bonds bonds as a sole-trader who has a poor credit history. I have looked into companies who offer bad credit surety bonds but I need to secure the bond against the performance of my business to my clients. To be honest I don't really understand all of the jargon as I am a new business owner who has never had to deal with this kind of thing before - but was informed by a relative that it's something I need to sort out. I don't really want to ask them since my finances are something I like to keep private.

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