Subject to the terms and conditions in the underwriting agreement among the Issuing Entity, Virginia Electric and Power Company and the underwriters, for whom Morgan Stanley & Co. LLC, ATLAS SP Securities, a division of Apollo Global Securities, LLC and Wells Fargo Securities, LLC are acting as representatives, the Issuing Entity has agreed to sell to the underwriters, and the underwriters have severally agreed to purchase, the principal amount of the Bonds listed opposite each underwriter’s name below:
| | | | | | | | |
Underwriter | | Tranche
A-1 | | | Tranche
A-2 | |
Morgan Stanley & Co. LLC | | $ | 175,721,000 | | | $ | 337,040,000 | |
ATLAS SP Securities, a division of Apollo Global Securities, LLC | | $ | 87,860,000 | | | $ | 168,520,000 | |
Wells Fargo Securities, LLC | | $ | 87,860,000 | | | $ | 168,520,000 | |
Citigroup Global Markets Inc. | | $ | 39,537,000 | | | $ | 75,834,000 | |
Jefferies LLC | | $ | 19,768,000 | | | $ | 37,917,000 | |
SMBC Nikko Securities America, Inc. | | $ | 19,768,000 | | | $ | 37,917,000 | |
Siebert Williams Shank & Co., LLC | | $ | 8,786,000 | | | $ | 16,852,000 | |
| | | | | | | | |
Total | | $ | 439,300,000 | | | $ | 842,600,000 | |
The underwriters may allow, and dealers may reallow, a discount not to exceed the percentage listed below for each tranche:
| | | | | | | | |
Tranche | | Selling Concession | | | Reallowance Discount | |
A-1 | | | 0.20 | % | | | 0.10 | % |
A-2 | | | 0.20 | % | | | 0.10 | % |
After the initial public offering, the public offering prices, selling concessions and reallowance discounts may change.
WEIGHTED AVERAGE LIFE SENSITIVITY
| | | | | | | | | | | | | | | | | | | | |
| | | Expected Weighted | | | -5%
(3.53 Standard
Deviations from Mean) | | | -15%
(16.27 Standard
Deviations from Mean) | |
Tranche | | Average Life (Years) | | | WAL (yrs) | | | Change (days)(1) | | | WAL (yrs) | | | Change (days) (1) | |
A-1 | | | 1.90 | | | | 1.90 | | | | 0 | | | | 1.90 | | | | 0 | |
A-2 | | | 5.40 | | | | 5.40 | | | | 0 | | | | 5.40 | | | | 0 | |
| (1) | Number is rounded to whole days. |
Assumptions
For the purposes of preparing the above chart, the following assumptions, among others, have been made:
| | (i) | in relation to the initial forecast, the forecast error stays constant over the life of the Bonds and is equal to an overestimate of electricity usage of 5% (3.53 standard deviations from mean) or 15% (16.27 standard deviations from mean); |
| | (ii) | the servicer makes timely and accurate semi-annually true-up adjustments (at least quarterly beginning 12 months prior to the scheduled final payment date of the latest maturing tranche), but makes no interim true-up adjustments; |
| | (iii) | for purposes of setting the initial deferred fuel cost charge, the net charge-off rate as a percentage of billed revenue and average days sales outstanding per customer bill is each assumed to equal Virginia Power’s average (mean) for 2023; |
| | (iv) | for purposes of setting a subsequent deferred fuel cost charge, and for purposes of calculating actual deferred fuel cost charge collections, net charge-off rate as a percentage of billed revenue and the average days sales outstanding per customer bill are both held constant at Virginia Power’s maximum (most unfavorable) for 2023; |
| | (v) | during the first payment period, interest will accrue for approximately 9 months and the deferred fuel cost charge will be collected for approximately 9 months; |
| | (vi) | there is no acceleration of the final maturity date of the Bonds; and |
| | (vii) | the issuance date of the Bonds is February 14, 2024. |
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