The latest rate reduction bond offering from Houston-based CenterPoint Energy Inc. was being shown throughout Southeast Asia last week in the hopes that bankers can drum-up demand for the deal and for future Texas RRB issuance. Representatives from joint-lead managers Credit Suisse First Boston, Lehman Brothers and RBS Greenwich Capital, as well as financial advisor Saber Partners were in the midst of a whirlwind tour that included Beijing, Hong Kong, Singapore and Tokyo last week, showing off CenterPoint's $1.85 billion offering that is due to hit the market before the end of the year.
If the syndicate can convince Asian investors to come aboard on the deal, it will be the first time foreign investors have participated in a utility rate payer-backed securitization from the U.S. A source familiar with the offering and the roadshow, said the it is focused on large Asian banks, in the hopes to capitalize on the growing interest by Asian investors in U.S. ABS, and from Asian investors who wish to turn away from U.S. agency debt, due to the uncertainty surrounding the GSEs.
The roadshow may also lay the groundwork for investment in future issuance from the state of Texas, from which $2 billion to $3 billion is expected over the next 18 months from issuers such as CenterPoint and AEP Texas Central Co. Following the $1.85 billion CenterPoint deal, RRBs from Texas will comprise nearly 25% of the outstanding issuance in the sector. All ABS issued from Texas have the unique distinction of carrying a 20% risk capital weighing from U.K.'s Financial Services Authority, similar to the risk weighting assigned for U.S. agency debt, whereas corporate debt and ABS from other issuers carry a 100% risk weighting.
The 20% risk weighting is likely to make the deal more attractive to U.K. investors. The source said that while it is not known what risk capital rating the bonds would receive in Asia, it is likely the Asian weighting would be similar to the U.K. weighting. The source also said the roadshow will continue on to Europe with bankers visiting London and Dublin, among other cities, soon after the visit to Asia concludes.
Officials with the investment banks could not be reached for comment, or declined comment until the deal is closer to pricing.
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