Southern California Edison Co. is consolidating some 18 separate credit lines into a single $1 billion facility, led by Chemical Bank.
The electric utility joins a number of other investmentgrade companies that have moved from bilateral to syndicated bank credit lines in the past year, taking advantage of intense competition in the loan market.
Just last month, Goodyear Tire & Rubber Co. picked Chemical to lead a $1.2 billion backup line - Goodyear's first agented credit in years.
Southern California Edison initially contacted some of its banks about renewing a number of three-year bilateral credit lines. Those calls prompted half a dozen or more unsolicited offers from banks wanting to lead a consolidated five-year credit for the utility, said Leonard Clark, its assistant treasurer.
Mr. Clark said the pricing indications the utility received on the proposed five-year deals were so favorable that it decided to take advantage of a longer maturity.
The new credit will be used mainly as a backstop for the issuance of commercial paper, rated Al. The utility's senior secured debt is rated A-plus, but those ratings are under review for possible downgrade. The utility will pay an annual facility fee of 10 basis points on the undrawn portion.
Mr. Clark denied a report that Chemical waived arranger and legal fees to win the agency role.
Southern California Edison is approaching its 18 relationship banks to participate in the credit. Based on verbal commitments, Mr. Clark said the credit is already oversubscribed.