Philadelphia Electric Co. last week used a modified dutch auction to refinance $160 million of high-coupon bonds that could not have been called until 1995 -- the longest window yet in which a municipal issuer has used the strategy.

To participate in the auction, holders of the utility's outstanding bonds -- which cannot be advance refunded because of tax law restrictions -- submitted bids reflecting a price at which they would be willing to sell their securities back to the company.

Philadelphia Electric had the option to reject or accept any of the bids but once a level was picked, all bondholders that submitted bids at or below that level received that price, regardless of their bids. The utility paid a price of 122, according to Joseph S. Fichera, a managing director at Bear Stearns & Co., which managed the auction.

The auction effectively retired more than half of an outstanding $286 million issue with 10% coupons, replacing them with a new $160 million issue with a 6.7% coupon that was priced to yield 6.83%, Mr. Fichera said.

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