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A P R I L 2 0 0 8

A P R I L 2 0 0 8. I M G A B O A R D M E E T I N G. Prepayment market update. S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L.

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A P R I L 2 0 0 8

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  1. APRIL2008 IMGABOARDMEETING Prepayment market update STRICTLYPRIVATEANDCONFIDENTIAL

  2. This presentation was prepared exclusively for the benefit and internal use of the JPMorgan client to whom it is directly addressed and delivered (including such client’s subsidiaries, the “Client”) in order to assist the Corporation in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions and does not carry any right of publication or disclosure, in whole or in part, to any other party.This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by JPMorgan.Neither this presentation nor any of its contents may be disclosed or used for any other purpose without the prior written consent of JPMorgan. The information in this presentation is based upon any management forecasts supplied to us and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change.JPMorgan’s opinions and estimates constitute JPMorgan’s judgment and should be regarded as indicative, preliminary and for illustrative purposes only.In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Client or which was otherwise reviewed by us.In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Client or any other entity.JPMorgan makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a transaction.Unless expressly contemplated hereby, the information in this presentation does not take into account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and other effects. Notwithstanding anything herein to the contrary, the Client and each of its employees, representatives or other agents may disclose to any and all persons, without limitation of any kind, the U.S. federal and state income tax treatment and the U.S. federal and state income tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Client relating to such tax treatment and tax structure insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to the Client by JPMorgan. JPMorgan’s policies prohibit employees from offering, directly or indirectly, a favorable research rating or specific price target, or offering to change a rating or price target, to a subject Client as consideration or inducement for the receipt of business or for compensation.JPMorgan also prohibits its research analysts from being compensated for involvement in investment banking transactions except to the extent that such participation is intended to benefit investors. IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters included herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone not affiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties. JPMorgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan arranging, financial advisory and other investment banking activities are performed by a combination of J.P. Morgan Securities Inc., J.P. Morgan plc, J.P.Morgan Securities Ltd. and the appropriately licensed subsidiaries of JPMorgan Chase & Co. in Asia-Pacific, and lending, derivatives and other commercial banking activities are performed by JPMorgan Chase Bank, N.A.JPMorgan deal team members may be employees of any of the foregoing entities. This presentation does not constitute a commitment by any JPMorgan entity to underwrite, subscribe for or place any securities or to extend or arrange credit or to provide any other services. IMGABOARDMEETING

  3. Background 1 Market environment 6 Outlook for 2008 13 IMGABOARDMEETING 1

  4. Energy prepayments began in the 1990s, but interest has surged in the last 24 months Prepayments completed ($millions) • Treasury Review • No energy prepayments completed BACKGROUND • *Projects completed 2008 YTD 2

  5. How much gas has been prepaid? • Municipal Utilities’ Annual Load Profiles • Prepaid Volumes Comprise 19% of Total Load Total = 1800 Bcf Total = 1800 Bcf BACKGROUND • Municipal utilities use approximately 1800 Bcf of natural gas a year1 • Public gas utilities  1200 Bcf/year • Public electric utilities  600 Bcf/year • For deals completed in 2006 and 2007, prepaid gas volumes average approximately 330 Bcf/year through 2015, or 19% of total load per annum • ¹Source: Energy Information Administration 3

  6. Natural gas prepayments in 2007 Indiana Bond Bank $309 SCCPA $500 Southeast Alabama $907 Main Street $528 $527 TX GAS $1,934 Main Street $497 Salt River $1,159 Central Plains $529 • Jan • Feb • Mar • Apr • May • Jun • Jul • Aug • Sep • Oct • Nov • Dec SMUD $758 Long Beach $886 PEAK $451 Roseville $198 BACKGROUND San Antonio CPS $644 Lower Alabama $383 Denotes JPMorgan involvement as senior manager, gas supplier, commodity swap counterparty or credit provider Market highlights • 15 gas prepayments executed in 2007 - $10.2 billion • 10 gas prepayments executed in 2006 - $9.6 billion • JPMorgan led the market with $2.2 billion in 2007 4

  7. 4 5 5 6 3 2 4 6 1 2 3 1 Review of Tennergy project mechanics BP Energy Municipal Bondholders Gas Bond Proceeds Floating Payment Debt Service Gas Gas IMGA andother participants JPMorgan Ventures Tennergy JPMorganChase & Co. Prepayment Guaranty Index gas minus discount Annual Refund Fixed Payment Floating Payment Fixed Payment Floating Payment BP North America BACKGROUND Gas Supply Agreement: Tennergy delivers daily gas volumes to IMGA and the other participants in exchange for a floating Index price less a discount and annual refund Guaranty: JPMorgan Chase & Co. unconditionally guarantees JPMVEC’s financial obligations to Tennergy Gas Purchase Agreement: Tennergy pays JPMorgan Ventures (JPMVEC) upfront for a 20 year supply of firm natural gas Bond issuance: To finance the prepayment, Tennergy sells tax-exempt debt secured only by revenues from the project, non-recourse to the Participants Source of gas: JPMVEC enters into a 20 year physical natural gas supply contract with BP Energy Commodity Swap: Tennergy and JPMVEC execute matched gas swaps with BP North America to convert pricing from fixed to a floating Index 5

  8. Market environment Background 1 6 Outlook for 2008 13 IMGABOARDMEETING 6

  9. Prepayments depend of several value drivers Interest Rates ? • Increase in interest rates should produce greater savings • MMD/LIBOR relationship is at its lowest since June 2003 • As spread widens, prepayment savings will increase Credit Markets ? • Tax-exempt prepayment bond spreads are likely to remain wide • Subprime exposure has pushed supplier credit spreads wider and even resulted in credit rating downgrades for some Natural Gas Prices ? • Absolute levels could be higher but stability has been helpful • Higher gas prices increase the value of a prepayment • Shape of forward curve could be more contango • Lower near-term pricing and less backwardation will support prepayment savings MARKETENVIRONMENT Tenor • Longer prepayments typically result in greater savings by capturing more of the taxable vs. tax-exempt differential • Savings are not always linear Prepaid Gas Volumes • Seasonal sculpting can increase savings • Increasing prepaid volume later in the project will also improve savings (backloading) 7

  10. High interest rate environment is generally more favorable • Spread between taxable and tax-exempt rates is a primary value driver • Historically, the spread between tax-exempt and taxable rates widens as rates rise • Wider tax-exempt/taxable spreads, or a lower MMD/LIBOR ratio, improves project savings • Market movements have been severe in 2008, but have recently improved Historical 10-year AAA MMD vs. 10-year LIBOR1 MMD & LIBOR Rates LIBOR/MMD Spreads MARKETENVIRONMENT • Optimal environment: High rates and high spread between MMD and LIBOR 1Reflects market conditions as of April 21, 2008 8

  11. Ultimately, it is the combination of interest rates and credit spreads that are a key factor • Gas supplier’s cost of capital is a function of LIBOR plus a specific credit spread • Municipal issuer’s cost of capital is a function of MMD plus a specific credit spread Illustration - Taxable funding levels vs. tax-exempt prepayment pricing • Credit Spread • Prepayment Value • Credit Spread • VS. MARKETENVIRONMENT • LIBOR • MMD 9

  12. Gas suppliers’ credit spreads have increased sharply since August 2007 • As financial institutions have taken over $206 billion of write-downs on their exposure to subprime mortgages • These write-downs created anxiety among investors and, in part, led to investors demanding increased credit spreads • 5Y Credit default swap spreads (bps) MARKETENVIRONMENT Source: JPMorgan DataQuery, as of April 15, 2008 Source: The Wall Street Journal, 01/18/08 10

  13. As supplier credit spreads have increased, so have credit spreads for prepayment bonds • Prepayment bond ratings are based primarily on gas supplier’s credit • Prepayment bond credit spreads in some cases have increased more on a percentage basis than gas suppliers credit spreads have increased 10Y MMD vs. the spreads of prepayment bonds MMD Rates Spreads (bps) MARKETENVIRONMENT Source: JPMorgan DataQuery, as of April 15, 2008. Spreads to MMD. 11

  14. Gas market dynamics appear stable • The stability in gas prices, especially compared to the rates and credit markets, has been conducive to the execution of prepayments • A gas curve that is more contango would create more savings • Natural gas prices are notoriously unpredictable due to their correlation with weather NYMEX natural gas curve as of April 23, 2008 MARKETENVIRONMENT • *JPMorgan forecast as of March 10, 2008 12

  15. Outlook for 2008 Background 1 Market environment 6 13 IMGABOARDMEETING 13

  16. Outlook for balance of 2008? Taxable vs Tax-Exempt Rates Absolute Level of Interest Rates Gas Supplier’s Cost of Capital OUTLOOKFOR2008 Tax-Exempt Prepayment Bond Spreads Investor Demand and Market Access Alternative Funding Structures 14

  17. Interest rates expected to trend slightly higher JPMorgan economic forecast Interest Rate Forecast (%) OUTLOOKFOR2008 Economic Data1 (%ch q/q, saar, unless otherwise noted) 1 Data as of 4/18/2008 * Q4/Q4 change 15

  18. Supplier credit spreads have shown some improvement • 5Y Credit default swap spreads (bps) OUTLOOKFOR2008 Source: JPMorgan DataQuery, as of April 15, 2008 16

  19. The MMD/LIBOR relationship has rebounded from extreme levels • The spread on 10 year MMD vs. 10 year LIBOR bottomed at just 11 basis points from a high of nearly 170 basis points on July 6th , it has since rebounded by approximately 60 basis points • Though the future is uncertain, market movement in recent weeks is encouraging 2008 10-year AAA MMD vs. 10-year LIBOR1 MMD & LIBOR Rates LIBOR/MMD Spreads OUTLOOKFOR2008 • Low of 11 bps 1Reflects market conditions as of April 15, 2008 17

  20. What does this mean for prepayments? • Potential for continued market improvement and project execution • MMD vs. LIBOR spread • Supplier credit spreads • Prepayment bond spreads • Is investor demand returning to the fixed rate bond market? • Long term market seeing some strength • Size constraints improving • Can additional projects get done with variable rate financing structure? • Credit availability • Prepaid supplier funding considerations • Additional termination events • Prepayment market depends on future market technicals and economic news • Municipal market supply/demand • Tax-exempt vs. taxable ratios • News/earnings reports for investment banks/commercial banks • Overall credit cycle OUTLOOKFOR2008 18

  21. Tennergy project team Tennergy Corporation • Philip Bell – 731-422-7212 • pbell@tennergy.com • Mechele Williams – 731-422-7254 mwilliams@tennergy.com Bass, Berry & Sims Hunton & Williams McKee Nelson • Darrell Smelcer – 404-888-4209 • dsmelcer@hunton.com • Lynn Gavin – 404-888-4273 • lgavin@hunton.com • Doug Bird – 917-777-4666 • dbird@mckeenelson.com • Mark Mamantov – 865-521-0365 • mmamantov@bassberry.com • Russ Miller – 615-742-7778 • rmiller@bassberry.com OUTLOOKFOR2008 J.P. Morgan Securities Inc. JPMorgan Ventures Energy BP Corporation North America • Lance Etcheverry – 214-965-3722 • lance.s.etcheverry@jpmorgan.com • Melissa Houskamp – 904-305-4888 • melissa.l.houskamp@jpmorgan.com • Robert Servas – 212-834-7155 • robert.c.servas@jpmorgan.com • Chris Calger – 212-834-2036 christopher.f.calger@jpmorgan.com • Mark Lenczowski – 212-648-0285 mark.lenczowski@jpmorgan.com • Troy Black – 281-366-4733 • troy.black@bp.com • Don Black – 281-366-6993 • donald.black@bp.com 19

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