Exelon Unit Issues $600M Debt - Analyst Blog

Utility services company, Exelon Corporation (EXC), announced that its unit Commonwealth Edison Company (ComEd) sold $600 million of First Mortgage Bonds. The bonds will mature on January 15, 2014, with an interest of 1.625%.

ComEd will utilize the net proceeds from the issue to contribute in Exelon Corporation sponsored pension plans. The pension contribution along with the recent federal tax legislation allowing for accelerated depreciation deductions in 2011 and 2012 will make Exelon's unit eligible for tax refunds. ComEd intends to use future cash receipts to fund capital investment and for general corporate purposes.

Exelon's total long-term debt (including long-term debt owed to financing trusts) at the end of third-quarter 2010 was $12.1 billion, compared with $11.4 billion at the end of 2009. This new issue will increase the interest expenses of the company, which was $169 million at the end of third-quarter 2010.

In September 2010, Exelon unit Exelon Generation issued $900 million debts in two tranches, which were utilized to pay a portion of the purchase price for its pending acquisition of John Deere Renewable, LLC, and for general corporate purposes.

During the third quarter earnings call Exelon raised its operating earnings guidance for 2010 to a range of $3.95 – $4.10 per share from the prior range of $3.80 – $4.10 per share, taking into consideration the strong results in the first nine months of 2010. The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are 91 cents per share, $4.00 per share and $4.08 per share, respectively.

Exelon currently retains a Zacks #3 Rank (short-term Hold rating). We presently maintain a Neutral rating on the stock. The closest peers of the company are Ameren Corporation (AEE) and PPL Corporation (PPL), with Exelon's net margin faring better than its peers in the trailing twelve months.

Based in Chicago, Illinois, Exelon Corporation, through its subsidiaries, engages in the generation, transmission, distribution and sale of electricity to residential, commercial, industrial and wholesale customers.

 
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