AEP Texas Central Transition Funding III LLC Senior Secured Transition Bonds
$800,000,000 Senior Secured Transition Bonds, scheduled to pay principal semiannually and sequentially in accordance with the expected sinking fund schedule.
Issuing Entity and Capital Structure
AEP Texas Central Transition Funding III LLC is a special purpose Delaware limited liability company. AEP Texas Central Company is our sole member and owns all of our equity interests. We have no commercial operations. We were formed solely to purchase and own transition property, to issue transition bonds and to perform activities incidental thereto. Please read “AEP Texas Central Transition Funding III LLC, the Issuing Entity” in the accompanying prospectus.
We will be capitalized with an upfront cash deposit by TCC of 0.5% of the bonds' principal amount issued (to be held in the capital subaccount) and will have an excess funds subaccount to retain, until the next payment date, any amounts collected and remaining after all payments on the bonds have been made.
Our Relationship With The PUCT
Pursuant to the financing order,
- the PUCT or its designated representative has a decision-making role co-equal with TCC with respect to the structuring, marketing and pricing of the transition bonds and all matters related to the structuring, marketing and pricing of the transition bonds will be determined through a joint decision of TCC and the PUCT or its designated representative,
- TCC is directed to take all necessary steps to ensure that the PUCT or its designated representative is provided sufficient and timely information to allow the PUCT or its designated representative to fully participate in, and exercise its decision-making power over, the proposed securitization, and
- The servicer will file periodic adjustments to transition charges with the PUCT on our behalf.
We have agreed that certain reports concerning transition charge collections will be provided to the PUCT.
Purpose Of Transaction
This issuance of Senior Secured Transition Bonds will enable TCC to recover certain costs related to its transition-to-competition in the State of Texas. Please read “The Restructuring Act” in the prospectus.
539 N. Carancahua Street
Corpus Christi, Texas 78401
View SEC filings for AEP Texas Central Transition Funding III LLC.
Senior Secured Transition Bonds
AEP Texas Central Transition Funding III LLC
Senior Secured Transition Bonds
|Tranche||Expected Average Life (Years)||Principal Amount Issued||Interest Rate||Price to Public||Underwriting Discounts and Commissions||Proceeds to the Issuing Entity||Scheduled Final Payment Date||Final Maturity Date|
The total price to the public is $799,996,891. The total amount of the underwriting discounts and commissions is $3,200,000. The total amount of proceeds to the issuing entity before deduction of expenses (estimated to be $3,403,564) is $796,796,891.
Investing in the Senior Secured Transition Bonds involves risks. Please read “Risk Factors” on page 12 of the accompanying prospectus(PDF).
AEP Texas Central Transition Funding III LLC is issuing $800,000,000 of Senior Secured Transition Bonds, referred to herein as the bonds, in three tranches. AEP Texas Central Company is the seller, initial servicer and sponsor with regard to the bonds. The bonds are senior secured obligations of the issuing entity supported by transition property which includes the right to a special, irrevocable nonbypassable charge, known as a transition charge, paid by retail electric customers in the service territory of the sponsor based on their consumption of electricity as discussed herein. The utility restructuring provisions of the Public Utility Regulatory Act mandate that transition charges be adjusted annually, and the Public Utility Commission of Texas further requires such true-ups to occur semi-annually (and permits such true-ups to occur more frequently) if necessary, in each case to ensure the expected recovery of amounts sufficient to timely provide all scheduled payments of principal and interest on the bonds, as described further in this prospectus supplement and the accompanying prospectus, and the Public Utility Commission of Texas guarantees it will act pursuant to the financing order to ensure such recoveries as described below. Credit enhancement for the bonds will be provided by such statutory true-up mechanisms as well as by accounts held under the indenture.
The bonds represent obligations only of the issuing entity, AEP Texas Central Transition Funding III LLC, and do not represent obligations of the sponsor or any of its affiliates other than the issuing entity. Please read “The Bonds—The Transition Property,” “—The Collateral” and “Credit Enhancement” in this prospectus supplement. The bonds are secured by the assets of the issuing entity, consisting principally of the transition property and funds on deposit in the collection account for the bonds and related subaccounts. Please read “The Bonds—The Collateral,” “—The Transition Property” and “Credit Enhancement” in this prospectus supplement. The bonds are not a debt or general obligation of the State of Texas, the Public Utility Commission of Texas or any other governmental agency or instrumentality and are not a charge on the full faith and credit or the taxing power of the State of Texas or any governmental agency or instrumentality.
The Public Utility Commission of Texas guarantees that it will act pursuant to its irrevocable financing order as expressly authorized by the Texas Electric Utility Restructuring Act to ensure that expected transition charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the bonds. The Public Utility Commission of Texas' obligations relating to the bonds, including the specific actions that it has guaranteed to take, are direct, explicit, irrevocable and unconditional upon issuance of the bonds, and are legally enforceable against the Public Utility Commission of Texas, which is a United States public sector entity.
All matters relating to the structuring and pricing of the bonds have been considered jointly by AEP Texas Central Company and the Public Utility Commission of Texas or its designated representative.
Additional information is contained in the accompanying prospectus. You should read this prospectus supplement and the accompanying prospectus carefully before you decide to invest in the bonds. This prospectus supplement may not be used to offer or sell the bonds unless accompanied by the prospectus. Please review the prospectus and prospectus supplement (PDF).
Ratings assigned to the AEP Texas Transition Funding III LLC Senior Secured Transition Bonds and to the debt issued by the Servicer
Issuer: AEP Texas Central Transition Funding III LLC
Instrument: Transition Bonds
Moody's Rating: Aaa
S&P Rating: AAA
Fitch Rating: AAA
Servicer:AEP Texas Central Company
Instrument: Senior Unsecured Debt
Moody's Rating: Baa2
Moody's Outlook: Stable
S&P Rating: BBB
S&P Outlook: Stable
Fitch Rating: A-
Fitch Outlook: Stable