Pacific Gas & Electric Co., the San Francisco-based energy supplier, is back into the ABS market after an eight year absence and an historic plunge into and out of bankruptcy, but its bonds are none the worse for wear and are pricing at record tight levels. The $1.9 billion series 2005-1 deal, which priced last week, was led by Citigroup Global Markets, Lehman Brothers and Morgan Stanley and may serve to draw other issuers out of the woodwork after last year's low volume output.
The three shortest tranches of the deal all priced through guidance last Thursday, with the longer-dated two tranches pricing within guidance. Though the deal did not price as tightly as some market observers expected, it was reportedly oversold across the capital structure and could re-price the sector and open the door for other issuers from states such as Massachusetts, Wisconsin and New Jersey. "PG&E should be congratulated for market timing," said one market observer. "[Bringing a deal at these spreads] is like being born on third base and thinking you hit a triple."