The California Community Choice Financing Authority (CCCFA) issued $1.04 billion in bonds to prepay for a 30-year supply of clean energy to a northern California electricity provider.
The authority sold both tax-exempt and taxable bonds. The vast majority of tax-exempt bonds, worth $1.01 billion, mature on November 1, 2054, and yield 4.48%. They are subject to a mandatory tender on April 1, 2030. The taxable bonds, worth $24.5 million, mature on April 1, 2030, and yield 6.125%. The securities received a rating of A2 from Moody’s Investors Service.
The bond proceeds will fund the pre-purchase of electricity from Aron Energy Prepay 21 LLC, a subsidiary of a Goldman Sachs-owned commodities trader. Aron will then loan the funds to Goldman Sachs and supply energy to Marin Clean Energy, which disburses electricity to retail customers in northern California at reduced rates.
As a result of the transaction’s structure, Moody’s analysts listed only a change in Goldman’s credit rating as a factor that could lead to an upgrade or downgrade of the bonds.
The rating takes into account “the structure and mechanics of the transaction which provide for the payment of debt service consistent with the rating assigned to the Bonds,” Moody’s analysts wrote.
The bonds are special and limited obligations of the authority, secured by loan repayment.
Goldman Sachs & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $1.08 billion. The price reflected a premium of $42 billion. Municipal Capital Markets Group, Inc served as financial advisor.