Vermont Transco Taps Private Market for $135 Million
Tightest pricing in two years...
August 7, 2009
Repeat issuer Vermont Transco LLC got $135 million in private funds this week via Manor Private Capital, sources confirmed. The deal priced at the tightest new issue spread seen in the private market in two years.
The first mortgage bond was launched at $85 million in size, but upsized to $135 million, and two investors participated. The transaction was structured with a 20-year final, 10-year average life maturity, and priced at 96 basis points over Treasurys. The credit carries a rating of ‘A’ from Dominion Bond Rating Service, making it an NAIC-1 credit.
Vermont Transco has now tapped the private market four times since 2006, and the entity’s deals have consistently priced below 100 basis points over Treasurys. Back in February of 2007, the issuer got $80 million in first mortgage paper via Macquarie Securities. That deal was done with a 30-year final, 20-year average life and priced at 87 basis points over Treasurys.
In October 2006, the issuer also got $35 million in first mortgage paper, again via Macquarie, with the same maturity and priced at 90 basis points over Treasurys. In March of 2006 the precursor to Vermont Transco, Vermont Electric Power Co. (VELCO), did a $30 million first mortgage bond with a 30-year bullet maturity that priced at 94 basis points over Treasurys, also via Macquarie.
While the tight pricing of the current deal is not unusual for the issuer, it stands out as the tightest pricing on a new private placement in two years. While some recent deals such as Wells Fargo’s placement for Nicor Gas (120 bps), and Banc of America Securities Merrill Lynch’s deal for Georgia Transmission (185 bps) have priced in the 100s over Treasurys, private placements have not regularly priced below 100 bps since 2006. The most recent deal to price inside 100 basis points over Treasurys, prior the current Vermont Transco deal, was a leveraged lease transaction by Union Pacific back in July 2007, via Banc of America Securities, which priced at 80 basis points over Treasurys for a four-year bullet.
Based in Rutland, Vt., Vermont Transco is a high-voltage electricity transmission company that serves 20 electric distribution utilities in Vermont. The company was founded in June 2006 by VELCO.-GC
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