Duke Energy 2012 Annual Report Download - page 79

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PART II
In March 2012, Duke Energy Indiana issued $250 million principal amount
of fi rst mortgage bonds, which carry a fi xed interest rate of 4.20% and mature
March 15, 2042. Proceeds from the issuance were used to repay a portion of
Duke Energy Indiana’s outstanding short-term debt.
In January 2012, Duke Energy Carolinas used proceeds from its December
2011 $1 billion issuance of principal amount of fi rst mortgage bonds to repay
$750 million 6.25% senior unsecured notes that matured January 15, 2012.
Signifi cant Notes Payable and Long-Term Debt Activities — 2011.
In December 2011, Duke Energy Carolinas issued $1 billion principal
amount of fi rst mortgage bonds, of which $350 million carry a fi xed interest rate
of 1.75% and mature December 15, 2016 and $650 million carry a fi xed interest
rate of 4.25% and mature December 15, 2041. Proceeds from the issuances
were used to repay $750 million 6.25% senior unsecured notes which matured
January 15, 2012, with the remainder to fund capital expenditures and for
general corporate purposes.
In November 2011, Duke Energy issued $500 million of senior unsecured
notes, which carry a fi xed interest rate of 2.15% and mature November 15,
2016. Proceeds from the issuance will be used to fund capital expenditures in
Duke Energy’s unregulated businesses in the U.S. and for general corporate
purposes.
In the third quarter of 2011, Duke Energy issued an additional
$450 million in Commercial Paper. Proceeds from this issuance were used for
general corporate purposes. In the fourth quarter of 2011, Duke Energy repaid
$375 million of Commercial Paper with the proceeds from the August 2011 Duke
Energy debt issuances discussed below.
In August 2011, Duke Energy issued $500 million principal amount of
senior unsecured notes, which carry a fi xed interest rate of 3.55% and mature
September 15, 2021. Proceeds from the issuance were used to repay a portion
of Duke Energy’s commercial paper, as discussed above, as it matures, to fund
capital expenditures in Duke Energy’s unregulated businesses in the U.S. and for
general corporate purposes.
In May 2011, Duke Energy Carolinas issued $500 million principal
amount of fi rst mortgage bonds, which carry a fi xed interest rate of 3.90% and
mature June 15, 2021. Proceeds from this issuance were used to fund capital
expenditures and for general corporate purposes.
Signifi cant Notes Payable and Long-Term Debt Activities — 2010.
In December 2010, Top of the World Wind Energy, LLC, a subsidiary of DEGS,
an indirect wholly owned subsidiary of Duke Energy, entered into a long-term
loan agreement for $193 million principal amount maturing in December 2028.
The collateral for this loan is substantially all of the assets of Top of the World
Windpower LLC. The initial interest rate on the notes is the six month adjusted
LIBOR plus an applicable margin. In connection with this debt issuance, DEGS
entered into an interest rate swap to convert the substantial majority of the
loan interest payments from a variable rate to a fi xed rate of 3.465% plus the
applicable margin, which was 2.375% as of December 31, 2012. Proceeds from
the issuance will be used to help fund the existing wind portfolio.
In September 2010, Duke Energy Carolinas converted $143 million of
tax-exempt variable-rate demand bonds to tax-exempt term bonds, which
carry a fi xed interest rate of 4.375% and mature October 2031. Prior to the
conversion, the bonds were held by Duke Energy Carolinas as treasury bonds. In
connection with the conversion, the tax-exempt bonds were secured by a series
of Duke Energy Carolinas’ fi rst mortgage bonds.
In September 2010, Duke Energy Carolinas converted $100 million of
tax-exempt variable-rate demand bonds, to tax-exempt term bonds, which carry
a fi xed interest rate of 4.625% and mature November 1, 2040. In connection
with the conversion, the tax-exempt bonds were secured by a series of Duke
Energy Carolinas’ fi rst mortgage bonds.
In September 2010, Duke Energy Indiana refunded $70 million of tax-exempt
auction rate bonds through the issuance of $70 million principal amount of
tax-exempt term bonds, of which $60 million carry a fi xed interest rate of 3.375%
and mature March 1, 2019, and $10 million carry a fi xed interest rate of 3.75%
and mature April 1, 2022. In connection with the conversion, the tax-exempt bonds
were secured by a series of Duke Energy Indiana’s fi rst mortgage bonds.
In July 2010, Duke Energy Indiana issued $500 million principal amount
of 3.75% fi rst mortgage bonds due July 15, 2020. Proceeds from the issuance
were used to repay $123 million of borrowings under the Master Credit Facility,
to fund Duke Energy Indiana’s ongoing capital expenditures and for general
corporate purposes.
In July 2010, International Energy issued $281 million principal amount
in Brazil, which carries an interest rate of 8.59% plus IGP-M (Brazil’s monthly
infl ation index) non-convertible debentures due July 2015. Proceeds of the
issuance were used to refi nance Brazil debt related to DEIGP and for future debt
maturities in Brazil.
In June 2010, Duke Energy Carolinas issued $450 million principal amount
of 4.30% fi rst mortgage bonds due June 15, 2020. Proceeds from the issuance
were used to fund Duke Energy Carolinas’ ongoing capital expenditures and for
general corporate purposes.
In May 2010, Green Frontier Wind Power, LLC, a subsidiary of DEGS, an
indirect wholly owned subsidiary of Duke Energy, entered into a long-term loan
agreement for $325 million principal amount maturing in 2025. The collateral
for this loan is a group of fi ve wind farms located in Wyoming, Colorado and
Pennsylvania. The initial interest rate on the notes is the six month adjusted
LIBOR plus an applicable margin. In connection with this debt issuance, DEGS
entered into an interest rate swap to convert the substantial majority of the
loan interest payments from a variable rate to a fi xed rate of approximately
3.4% plus the applicable margin, which was 2.5% as of December 30, 2012.
Proceeds from the issuance were used to help fund the existing wind portfolio.
In March 2010, Duke Energy issued $450 million principal amount of
3.35% senior unsecured notes due April 1, 2015. Proceeds from the issuance
were used to repay $274 million of borrowings under the master credit facility
and for general corporate purposes.
Credit Facilities
Master Credit Facility Summary.
In November 2011, Duke Energy entered into a $6 billion, 5-year master
credit facility, expiring in November 2016, with $4 billion available at closing
and the remaining $2 billion available following successful completion of the
merger with Progress Energy. In October 2012, the Duke Energy Registrants
reached an agreement with banks representing $5.63 billion of commitments
under the master credit facility to extend the expiration date by one year to
November 2017. Through November 2016, the available credit under this
facility remains $6 billion. The Duke Energy Registrants each have borrowing
capacity under the master credit facility up to specifi ed sublimits for each
borrower. However, Duke Energy has the unilateral ability at any time to increase
or decrease the borrowing sublimits of each borrower, subject to a maximum
sublimit for each borrower. See the table below for the borrowing sublimits for
each of the borrowers as of December 31, 2012. The amount available under
the master credit facility is reduced by the use of the master credit facility
to backstop the issuances of commercial paper, certain letters of credit and