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Safety Of Duke Energy PremierNotes? Alternative To Money Market Funds?

Thursday, May 17, 2012 - 1:51 PM
Duke Energy is offering a similar type of uninsured liquid account that GE and Ford have been offering. Like GE Interest Plus Corporate notes and like the Ford Interest Advantage, Duke Engergy PremierNotes function like a money market fund with check writing. All 3 of these are debt obligations of the company. So they should be considered to have more risk than money market funds. However, Duke Energy PremierNotes should be less risky than if you buy Duke Energy stock (which happens to have a high dividend yield), since the PremierNotes won't have share price fluctuations. The risk would be more inline with a short-term bond. Just like a bond, there's always a default risk if the company has major problems (like what happened to Enron and Lehman Brothers).

The problem with GE and Ford is that the yields don't justify the risk since you can get higher yields with FDIC-insured money market accounts, like at TIAA Direct (1.25% APY as of 5/17/2012). However, Duke Energy PremierNotes may be tempting to some people since it has a top yield of 1.61% for balance of at least $50K (as of 5/17/2012). Even with that higher rate, I'm not sure it's enough for me to justify the risk.

Here's the website link of Duke Energy PremierNotes.

Also, here are the websites links for the GE and Ford notes:
Remember, these are NOT FDIC insured.
Ken TuminKen Tumin5,467 posts since
Nov 29, 2009
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