Duke Energy 2015 Annual Report Download - page 78

58
PART II
Year Ended December 31, 2014
Issuance Date
Maturity
Date
Interest
Rate
Duke
Energy
Duke
Energy
(Parent)
Duke
Energy
Progress
Duke
Energy
Florida
Unsecured Debt
April 2014(a) April 2024 3.750% $ 600 $ 600 $ — $ —
April 2014(a)(b) April 2017 0.613% 400 400 — —
June 2014(c) May 2019 11.970% 108 — — —
June 2014(c) May 2021 13.680% 110 — — —
Secured Debt
March 2014(d) March 2017 0.863% 225 — — 225
July 2014(e) July 2036 5.340% 129 — — —
First Mortgage Bonds
March 2014(f) March 2044 4.375% 400 — 400 —
March 2014(f)(g) March 2017 0.435% 250 — 250 —
November 2014(h) December 2044 4.150% 500 — 500 —
November 2014(g)(h) November 2017 0.432% 200 — 200 —
Total issuances $ 2,922 $ 1,000 $ 1,350 $ 225
(a) Proceeds were used to redeem $402 million of tax-exempt bonds at Duke Energy Ohio, the repayment of outstanding commercial paper and for general corporate purposes. See Note 13 to the Consolidated Financial
Statements, “Related Party Transactions” for additional information related to the redemption of Duke Energy Ohio’s tax-exempt bonds.
(b) The debt is floating rate based on three-month London Interbank Offered Rate (LIBOR) plus a fixed credit spread of 38 basis points.
(c) Proceeds were used to repay $196 million of debt for International Energy and for general corporate purposes. The interest rates include country specific risk premiums.
(d) Relates to the securitization of accounts receivable at a subsidiary of Duke Energy Florida. Proceeds were used to repay short-term borrowings under the intercompany money pool borrowing arrangement and for general
corporate purposes. See Note 17 to the Consolidated Financial Statements, “Variable Interest Entities” for further details.
(e) Proceeds were used to fund a portion of Duke Energy’s prior investment in the existing Wind Star renewables portfolio.
(f) Proceeds were used to repay short-term borrowings under the intercompany money pool borrowing arrangement and for general corporate purposes.
(g) The debt is floating rate based on three-month LIBOR plus a fixed credit spread of 20 basis points.
(h) Proceeds were used to repay to redeem $450 million of tax-exempt bonds, repay short-term borrowings under the intercompany money pool borrowing arrangement and for general corporate purposes.
Off-Balance Sheet Arrangements
Duke Energy and certain of its subsidiaries enter into guarantee
arrangements in the normal course of business to facilitate commercial
transactions with third parties. These arrangements include performance
guarantees, stand-by letters of credit, debt guarantees, surety bonds and
indemnifications.
Most of the guarantee arrangements entered into by Duke Energy enhance
the credit standing of certain subsidiaries, non-consolidated entities or less
than wholly owned entities, enabling them to conduct business. As such, these
guarantee arrangements involve elements of performance and credit risk, which
are not always included on the Consolidated Balance Sheets. The possibility
of Duke Energy, either on its own or on behalf of Spectra Energy Capital, LLC
(Spectra Capital) through indemnification agreements entered into as part of
the January 2, 2007, spin-off of Spectra Energy Corp (Spectra Energy), having
to honor its contingencies is largely dependent upon the future operations of
the subsidiaries, investees and other third parties, or the occurrence of certain
future events.
Duke Energy performs ongoing assessments of their respective guarantee
obligations to determine whether any liabilities have been incurred as a result of
potential increased non-performance risk by third parties for which Duke Energy
has issued guarantees.
See Note 7 to the Consolidated Financial Statements, “Guarantees and
Indemnifications,” for further details of the guarantee arrangements.
Issuance of these guarantee arrangements is not required for the majority
of Duke Energy’s operations. Thus, if Duke Energy discontinued issuing these
guarantees, there would not be a material impact to the consolidated results of
operations, cash flows or financial position.
Other than the guarantee arrangements discussed above, normal
operating lease arrangements and off-balance sheet debt related to non-
consolidated VIEs, Duke Energy does not have any material off-balance
sheet financing entities or structures. For additional information, see Note 5
and Note 17 to the Consolidated Financial Statements, “Commitments and
Contingencies” and “Variable Interest Entities,” respectively.