Western Minnesota Municipal Power Agency refunds $57 million of bonds
The Western Minnesota Municipal Power Agency (Western Minnesota) has refinanced about $57 million of tax-exempt bonds originally issued in 2003.
Pricing of the bonds was completed Aug. 8 with Citigroup acting as senior underwriter. The 2012 Series A Power Supply Revenue Refunding Bonds have an all-in true interest cost of 3.27 percent. The refinancing resulted in a net present value savings in excess of $11 million or 19.6% of the refunded bonds. The bonds have an average maturity of 14.4 years, maturing between 2024 and 2030. The total debt service savings for the next 17 years exceeds $15 million, with annual debt service savings of $550,000 for the next 10 years and $1.4 million annually thereafter. Closing on the 2012 bonds is set for Oct. 4.
Both Fitch Ratings and Moody’s Investors Service affirmed their existing ratings of the Western Minnesota Bonds. Fitch rates the bonds AA- with a stable outlook, while Moody’s rates the bonds Aa3, also with a stable outlook. Western Minnesota is one of a handful of joint action agencies in the country with ratings in the AA category.
Western Minnesota is a municipal corporation and political subdivision of the State of Minnesota and has financed the construction and acquisition for all of the electric generating and transmission facilities used to serve the municipal members of Missouri River Energy Services (MRES). The 23 members of Western Minnesota also are members of MRES.
MRES is a not-for-profit joint-action agency that provides wholesale electricity and energy services to 61 member municipalities in the states of Iowa, Minnesota, North Dakota, and South Dakota. All MRES members own and operate local electric distribution systems.
“We are very pleased with the results of the sale and the strong investor demand for the bonds. The interest rates were only 40 basis points over the MMD and the lowest in the 36-year history of Western Minnesota for similar maturities.” said MRES CEO Tom Heller. “The historically low interest rates and the strong credit ratings of Western Minnesota were the key factors in achieving these savings. The debt service savings will help keep the power supply costs of MRES among the lowest in the region.”
Western Minnesota and MRES have a power supply agreement under which Western Minnesota sells to MRES all of the output of its generating and transmission facilities. MRES provides all administrative services for Western Minnesota.
For more information, contact Merlin Sawyer at Missouri River Energy Services, phone: 605-338-4042; e-mail msawyer@mrenergy.com