Illinois Power $500 million first mortgage notes talked at 12%-12¼%, pricing possible Tuesday

By Paul A. Harris

St. Louis, Dec. 16 - Price talk of 12%-12¼% emerged Monday on Illinois Power Co.'s upcoming offering of $500 million first mortgage notes due 2010 (B3/B/BB-), according to a syndicate source.

The deal will possibly price on Tuesday, the source added.

Merrill Lynch & Co. and Credit Suisse First Boston are joint bookrunners.

The Rule 144A notes are non-callable for four years.

Proceeds will be used to refinance debt.

The Decatur, Ill.-based electric utility is a subsidiary of Dynegy, Inc.

Fitch Ratings on Monday assigned a BB- rating to the new securities but put them on negative watch, saying that if Dynegy renews its credit facility on a senior secured basis it will downgrade Dynegy's senior unsecured debt and Illinois Power's as well, including the first mortgage bonds.

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