CenterPoint Energy Transition Bond Co. IV, LLC is issuing $1.695 billion of senior secured transition bonds in multiple tranches. A wholly-owned subsidiary of public utility holding co. CenterPoint Energy, Inc., serves as the seller, initial servicer and sponsor. The bonds are secured by transition property, which includes the right to a special, irrevocable nonbypassable charge, known as a transition charge, paid by all retail electric customers in the certificated service territory.
The transition property is not a static pool of receivables or assets. The utility restructuring provisions of the Public Utility Regulatory Act mandate and the Public Utility Commission of Texas requires that transition charges be adjusted at least annually, and semi-annually as necessary, to ensure the expected recovery of amounts sufficient to timely provide all scheduled payments of principal, interest and other required amounts and charges in connection with the bonds. Credit enhancement for the bonds will be provided by such statutory true-up mechanism, as well as by general and capital subaccounts held under the indenture.
Goldman, Sachs & Co., Citigroup Global Markets and Morgan Stanley & Co. are acting as representatives of the underwriters. The prospectus supplement was filed on Form 424B2 filed 1/12/12 (SEC file no. 333-177662). The underlying registration on Form S-3 includes the Texas PUC financing order as Exhibit 99.5. The Form 8-K filed on 1/18/12 under file no. 001-03187 includes as exhibits the forms of indenture, transition property servicing agreement, transition property sale agreement, administration and intercreditor agreements.
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