Duke Energy offers first and refunding mortgage bonds in two parts

By Mary-Katherine Stinson

Lexington, Ky., June 13 – Duke Energy Carolinas, LLC will offer first and refunding mortgage bonds in two tranches, one tranche being an add-on to its 4.95% series due Jan. 15, 2033, according to a 424B5 filed with the Securities and Exchange Commission.

The second tranche of notes will mature Jan. 15, 2054.

Before Oct. 15, 2032, the 2033 bonds will be callable at a make-whole premium of Treasuries plus 20 basis points, followed by a par call option.

Before July 15, 2053, the 2054 bonds will feature a make-whole call option, followed by a par call option.

There may also be a special redemption at par for bonds of each series through the operation of the replacement fund or upon application of funds from any of the underlying mortgaged property being taken by eminent domain or a similar action. The company has agreed not to apply any cash deposited with the trustee pursuant to the replacement fund to the redemption of the bonds so long as any of the entitled first and refunding mortgage bonds remain outstanding. The replacement fund is comprised of cash deposited with the bond trustee annually tied to 2.5% of the average amount of depreciable fixed property owned by Duke Energy minus certain deductions.

The terms of the 2033 mortgage bonds will be identical to the terms of and will be part of the same series as the $900 million of the 4.95% bonds issued on Jan. 6.

BNP Paribas Securities Corp., MUFG Securities Americas Inc., PNC Capital Markets LLC, Santander US Capital Markets LLC and Scotia Capital (USA) Inc. are leading the sale. TD Securities (USA) LLC and Truist Securities, Inc. are also listed as bookrunners.

Bank of New York Mellon Trust Co., NA is the trustee.

Hunton Andrews Kurth LLP is serving as legal counsel to Duke Energy. Sidley Austin LLP will advise the underwriters.

Proceeds will be used to pay down a portion of the company’s outstanding intercompany short-term debt under the money-pool borrowing arrangement with Duke Energy Corp. and for general company purposes. As of May 31, the company had approximately $1.4 billion of outstanding short-term money-pool borrowings at an annual interest rate of 5.32%.

The sale for each series of bonds is expected to occur concurrently. However, the sale of each series of bonds is not conditioned upon the other.

The electricity provider is based in Charlotte, N.C.

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