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California Sells Almost $1 Bln in Clean Energy Bonds

By Munichain News Desk

A California state energy authority issued $998 million in bonds to finance low-emissions energy projects.

The California Community Choice Financing Authority (CCCFA) sold the bonds in two series. The Series 2023E-1 bonds, consisting of $903 million, mature between 2027 and 2054, yielding between 4.26% and 4.31%. The Series 2023E-2 bonds, consisting of $95 million, mature on February 1, 2054, and are indexed to the Secured Overnight Financing Rate (SOFR). However, the bonds are subject to mandatory tender on March 1, 2031. The securities received a rating of A1 from Moody’s Investors Service.

“As a not-for-profit public agency, we are able to utilize our tax-exempt status to reduce our power procurement costs,” said Susan Santangelo, chair of the California Clean Power Alliance’s Finance Committee, in a statement about the bond issuance.

The authority expects the bonds to reduce renewable energy costs by almost $32 million over the next five years. The bonds will be repriced in 2028.

The authority will use the bond proceeds to pre-pay for thirty years worth of low-emissions electricity from a provider, Morgan Stanley Energy Structuring LLC. The authority will then sell the energy to East Bay Community Energy (EBCE), a nonprofit public agency which provides electricity in the Bay Area. 

The deal could help EBCE meet its carbon neutrality goals. It has committed to producing zero greenhouse gasses by 2030.

The bonds are special, limited obligations of the CCCFA, payable by revenue from the sale of the clean energy.

Morgan Stanley & Co LLC served as underwriter on the issuance, purchasing the bonds for $1.03 billion. The price reflected an original issue premium of almost $40 million.

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