Western Minnesota Municipal Power Agency prices $35 million refunding bond issue; bond ratings affirmed
The Western Minnesota Municipal Power Agency (WMMPA) priced power supply refunding bonds Monday, July 6, for a $35-million issue.
The new bonds will result in net present value savings of $2.4 million and total debt service savings of approximately $4.1 million. They carry a true interest cost of 3.97 percent and have an average life of 18 years. Proceeds will be used to refund a portion of outstanding 2006 Series A power supply revenue bonds and to pay the costs relating to the issuance.
WMMPA is the provider of financing for all power supply and transmission facilities utilized by Missouri River Energy Services (MRES). MRES and WMMPA have a power supply contract that entitles MRES to the output of all WMMPA-owned facilities. MRES provides administrative services to WMMPA and provides wholesale electricity and energy services to 61 member municipalities in the states of Iowa, Minnesota, North Dakota, and South Dakota. Each MRES member community owns and operates an electric distribution utility.
“We are pleased with the strong investor demand for the WMMPA bonds,” said MRES Director of Finance and CFO Merlin Sawyer. “All maturities were significantly oversubscribed, which resulted in a reduction in the final rates on the 2015 bonds. Given the recent volatility in interest rates, we are pleased that we were able to sell the bonds into a strong market and lock in savings.”
In advance of the sale, two major financial ratings agencies affirmed their ratings and stable outlook for the Western Minnesota Municipal Power Agency.
Moody’s Investors Service assigned a rating of Aa3 to the 2015 bond issue and affirmed its Aa3 rating on about $565 million of previously issued power supply revenue bonds.
Fitch Ratings assigned an AA- rating to the 2015 issue and also affirmed its AA- rating on the previously issued bonds. Both agencies assigned stable outlooks to all of the bonds.
Moody’s and Fitch viewed favorably:
• The low-cost competitive power costs of MRES
• The sound financial policies of MRES and WMMPA
• Funding the debt service reserve account with internal funds instead of funding with debt
• Funding interest during construction for the Red Rock Hydroelectric Project (RRHP) from current rates, and
• The increasing diversity of power supply resources as strengths in assigning their ratings.
Both Moody’s and Fitch indicated that construction risk on the Red Rock Hydroelectric Project and potential impact of EPA regulations on the cost of the Laramie River Station could present challenges going forward.
“WMMPA is one of the few joint action agencies in the country that are rated in the double -A category,” Sawyer said. “We are pleased that both Fitch and Moody’s continue to recognize the financial strength of WMMPA, MRES, and the members.”
For more information, contact Joni Livingston at Missouri River Energy Services, phone: 605-338-4042; e-mail email@example.com.