Oncor Expands Debt Issuance

The Texas-based electric utility will use proceeds to manage debt obligations and support corporate initiatives.

January 17, 2025

Oncor Expands Debt Portfolio with Additional $100M in Senior Secured Notes

Oncor Electric Delivery Company LLC, a major Texas-based electric transmission and distribution utility, has announced the issuance of an additional $100 million in senior secured notes. This latest offering builds upon the company’s prior debt issuances, reinforcing its financial strategy as it navigates capital expenditures, debt management, and ongoing corporate needs.

The newly issued 4.65% Senior Secured Notes, due in 2029, are an extension of Oncor’s existing debt securities from November 2024, which previously raised $550 million. This move aligns with the company’s broader efforts to secure capital through debt markets while maintaining stable credit positioning. The sale of these additional notes was finalized on January 14, 2025, and the company intends to allocate the net proceeds of approximately $97.6 million toward general corporate purposes, including the repayment of outstanding commercial paper obligations.

Debt Issuance Details and Terms

The new debt issuance adheres to the same structural terms as the original 2029 Senior Secured Notes. Under the terms of the agreement, the newly issued notes will be treated as a single class with the previously issued notes. The notes, bearing a 4.65% annual interest rate, mature on November 1, 2029, with semi-annual interest payments scheduled for May 1 and November 1.

Oncor retains the option to redeem these notes prior to maturity under specified conditions. Prior to October 1, 2029, the company may repurchase the notes at their principal value plus accrued interest, alongside a make-whole premium. After this date, the notes may be redeemed at face value with accrued interest.

Strategic Use of Proceeds

Oncor’s decision to issue additional secured notes aligns with its ongoing financial and operational strategy. The utility provider intends to use the proceeds primarily to reduce commercial paper obligations, ensuring liquidity and financial flexibility as it continues its infrastructure investments.

Registration and Compliance Commitments

As part of this issuance, Oncor has entered into a Registration Rights Agreement with the initial purchasers of the notes. Under this agreement, the company commits to filing an exchange offer registration statement with the Securities and Exchange Commission (SEC) by April 1, 2026. This filing will allow holders to exchange these new notes for publicly registered securities.

Expansion of Exchange Offer

In a related development, Oncor has extended the expiration date for its ongoing exchange offers concerning previously issued debt securities. Initially set to expire on January 16, 2025, the exchange offer period has been extended to January 21, 2025.

Financial and Market Implications

Oncor’s latest financing move underscores the company’s focus on capital efficiency while maintaining a stable debt profile. The structured approach to debt issuance reflects a deliberate effort to optimize its cost of capital while funding essential infrastructure projects.

With a continued focus on long-term financial planning, Oncor is well-positioned to navigate the evolving energy landscape.