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Exelon Unit Prices Bonds

Zacks Equity Research

Exelon Corporation’s (EXC) unit, Commonwealth Edison Company (ComEd), has conducted a bond market transaction, thereby pricing its 4.60% First Mortgage Bonds worth $350 million. The bonds will mature on Aug 15, 2043. The offering will close on Aug 19.

Exelon intends to utilize the net proceeds of the issue to repay a part of its outstanding commercial paper obligations and use the remaining for general corporate purposes.

It is a normal practice of the companies to issue new bonds having a lower coupon rate for redeeming debts while reducing interest costs and extending repayment tenure.

Exelon and its subsidiaries issue bonds and notes from time to time and collect funds to repay its existing debts and for other purposes. Exelon’s unit, Baltimore Gas and Electric Company, issued notes in Jun 2013. The company utilized the net proceeds from the issue to repay a part of its existing notes and used the rest for general corporate purposes.

We appreciate Exelon’s steady effort towards minimization of the debt level. The company’s long-term debt as of Jun 30, 2013, was $16.1 billion, down from $17.2 billion at the end of Dec 31, 2012.

As of Jun 30, 2013, Exelon’s cash balance was $1.0 billion and cash provided by operating activities during the first six months of 2013 was $1.2 billion. A strong financial position enables the company to issue debts from time to time to meet its near-term requirements. It will also facilitate Exelon to pay an annual interest of $16.1 million, resulting from the current bond issue.

Exelon currently has a Zacks Rank #3 (Hold). However, other stocks in the industry that are worth considering include Huaneng Power International, Inc. (HNP) with a Zacks Rank #1 (Strong Buy), and Alliant Energy Corporation (LNT) and IdaCorp, Inc. (IDA), each with a Zacks Rank #2 (Buy).

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Read the Full Research Report on HNP

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