Understanding Storm Cost Recovery Bonds

Law360, New York (April 6, 2009, 12:00 AM EDT) -- Utility companies are increasingly using securitization technology to recoup losses incurred as a result of natural disasters such as hurricanes. There are two different structures that have been successfully used for the issuance of such “storm recovery bonds.”

The first method or the “traditional securitization method” is the use of a special purpose entity (“SPE”), that is wholly owned by the utility, to issue the storm recovery bonds.

In the alternative, the storm recovery bonds are issued by a governmental entity or agency and the proceeds...
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