CenterPoint Energy 2014 Annual Report Download - page 25

of cash distributions we receive with respect to our interests in Enable, please read “-
Additional Risk Factors Affecting Our Interests in Enable
Midstream Partners, LP - Our cash flows will be adversely impacted if we receive less cash distributions from Enable than we currently expect.”
Our right to receive any assets of any subsidiary, and therefore the right of our creditors to participate in those assets, will be effectively
subordinated to the claims of that subsidiary’
s creditors, including trade creditors. In addition, even if we were a creditor of any subsidiary, our
rights as a creditor would be subordinated to any security interest in the assets of that subsidiary and any indebtedness of the subsidiary senior to
that held by us.
If we are unable to arrange future financings on acceptable terms, our ability to refinance existing indebtedness could be limited.
As of December 31, 2014, we had $8.9 billion of outstanding indebtedness on a consolidated basis, which includes $3.0 billion of non-
recourse transition and system restoration bonds. As of December 31, 2014, approximately $1.1 billion principal amount of this debt is required
to be paid through 2017. This amount excludes principal repayments of approximately $1.2 billion on transition and system restoration bonds,
for which dedicated revenue streams exist. Our future financing activities may be significantly affected by, among other things:
As of December 31, 2014, CenterPoint Houston had approximately $2.4 billion aggregate principal amount of general mortgage bonds
outstanding under the General Mortgage, including (a) $290 million held in trust to secure pollution control bonds that are not reflected in our
consolidated financial statements because we are both the obligor on the bonds and the current owner of the bonds, (b) approximately $56
million held in trust to secure pollution control bonds that are not reflected on our financial statements because CenterPoint Houston is both the
obligor on the bonds and the current owner of the bonds, and (c) approximately $118 million held in trust to secure pollution control bonds for
which we are obligated. Additionally, as of December 31, 2014, CenterPoint Houston had approximately $102 million aggregate principal
amount of first mortgage bonds outstanding under the Mortgage. CenterPoint Houston may issue additional general mortgage bonds on the basis
of retired bonds, 70% of property additions or cash deposited with the trustee. Approximately $3.9 billion of additional first mortgage bonds and
general mortgage bonds in the aggregate could be issued on the basis of retired bonds and 70% of property additions as of December 31, 2014.
However, CenterPoint Houston has contractually agreed that it will not issue additional first mortgage bonds, subject to certain exceptions.
Our current credit ratings are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources - Other Matters - Impact on Liquidity of a Downgrade in Credit Ratings”
in Item 7 of Part II of this report.
These credit ratings may not remain in effect for any given period of time and one or more of these ratings may be lowered or withdrawn entirely
by a rating agency. We note that these credit ratings are not recommendations to buy, sell or hold our securities. Each rating should be evaluated
independently of any other rating. Any future reduction or withdrawal of one or more of our credit ratings could have a material adverse impact
on our ability to access capital on acceptable terms.
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general economic and capital market conditions;
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credit availability from financial institutions and other lenders;
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investor confidence in us and the markets in which we operate;
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maintenance of acceptable credit ratings;
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market expectations regarding our future earnings and cash flows;
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market perceptions of our ability to access capital markets on reasonable terms;
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our exposure to GenOn Energy, Inc. (GenOn) (formerly known as RRI Energy, Inc., Reliant Energy, Inc. and Reliant Resources, Inc.
(RRI)), a wholly owned subsidiary of NRG, in connection with certain indemnification obligations;
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incremental collateral that may be required due to regulation of derivatives; and
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provisions of relevant tax and securities laws.