Global Distribution Leads to Record Low Spreads for Bond Offering of Texas Utility.

NEW YORK -- CenterPoint Energy Transition Funding II sold $1.85 billion of bonds in 5 tranches on Friday at credit spread levels lower than any comparable transaction from any other utility. The offering significantly expanded the investor base for this type of security. The issuer is a finance subsidiary of CenterPoint Energy Houston (NYSE:CNP) an electric transmission and distribution utility in Texas. The triple-A bonds are backed by a special charge on all retail electric customers in the CenterPoint Energy Houston service territory. It is guaranteed by law and by the State of Texas' Public Utility Commission to be always adjusted to whatever level is necessary to repay the bonds.

"Competition lowers costs in any market and the pricing of these bonds benefited from competition from investors across the globe," said Barry Smitherman a member of the Texas Commission. "For the first time ever, investors from Asia to Ireland invested in this sector as well as major US institutions. Almost $1 billion in orders were received from Europe as a result of the bonds receiving a 20% international risk weighting from UK regulators. U.S. agency buyers, insurance companies, corporate investors and even asset backed investors also purchased the bonds with this unique and strong credit."

The bond's credit spreads, the amount in basis points (1/100 of a per cent) above a benchmark credit index, are lower than any other similar triple-A utility bond offering of size from any other state since 2001. The $250 million 2-year tranche were sold at a spread of 4.75 basis points below the benchmark LIBOR swap index to yield 4.841%, $368 million 5-year bonds were on top of the index, or 4.977%, $252 million 7.5-year bonds at plus 5 basis points or 5.089%, $519 million 10-year at plus 7 basis points or 5.172% and $462 million 13-year bonds at plus 13.5 basis points to the index or 5.302%.

The offering is part of the State of Texas' plan to finance the transition to a competitive retail electric market in Texas which began in 2002. The financing method and interest rates achieved will reduce the special charge to CenterPoint territory retail electric customers by more than $963 million. Other Texas utilities such as American Electric Power (NYSE:AEP) and Texas New Mexico Power could issue similar bonds late next year if the State approves pending applications. There is also the possibility of additional legislative authorizations for CenterPoint and others. All of which would add several billion dollars more to issuance of these bonds from Texas.

"This offering is expanding the investor base or these type of securities and will benefit utilities and their ratepayers in Texas and other states," said Joseph Fichera CEO of Saber Partners and financial advisor to the Texas Commission. "Wisconsin, West Virginia and Florida are considering similar bond offerings for their utilities for environmental costs in Wisconsin and West Virginia and hurricane damage recovery in Florida. The market can expect the next issue to likely come from Wisconsin in the first half of 2006."

Saber Partners serves as the financial advisor to the Wisconsin and Florida commissions. Information on the bonds can be found under the corporate ticker on Bloomberg under CNP or on the Market Axess trading platform under CNP or CenterPoint.