A Powerful Payday Draws Flak

March 2004
Investment Dealers' Digest;3/29/2004, Vol. 70 Issue 13, p7
Trade Publication
The $6.7 billion Pacific Gas & Electric Co. (PG & E) bond offering that finally priced in mid-March after two years of tortuous negotiations just can't seem to shake controversy. While PG&E and deal managers UBS AG and Lehman Brothers Inc. argue the deal was a major success, rival bankers and power industry critics say the transaction was mispriced-a situation that burned California ratepayers and that occurred despite the massive payday the two lead managers received for handling the complex deal. The crux of the argument surrounding the company is how much a bond's performance in the aftermarket indicates the correct initial pricing level.


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