Two Ohio utility rate reduction bonds that priced this summer rekindle a debate as to the appropriate benchmark for these securities, which are backed by fees charged to consumers to recover the cost associated with deregulation, fund major investments or repair extensive damage.

Historically, fixed income research departments and ratings agencies have compared rate reduction bonds to triple-AAA rated securities backed by credit card receivables or to traditional, investment grade corporate debt, but the two Ohio deals were priced relative to comparatively riskier bonds.

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