Colorado Springs, Colorado, issued more than $364 million in bonds to finance capital improvements to its utilities systems.
The city sold the bonds in two series. The Series 2023A bonds, consisting of $203 million, mature between 2028 and 2053, yielding between 2.94% and 4.11%. The Series 2023B bonds, consisting of $161 million, mature between 2023 and 2045, yielding between 2.94% and 3.93%. The securities received a rating of Aa2 from Moody’s Investors Service and AA+ from S&P Global Ratings.
“The assigned Aa2 rating reflects the inherent strength of CSU’s above average service territory, which encompasses the City of Colorado Springs and portions of the surrounding area,” Moody’s analysts wrote, referring to Colorado Springs Utilities.
The issuance comes as Colorado Springs increases spending on its transition to renewable energy. CSU has a capital need of $2.13 billion over the next five years, over half of which it expects to fund with debt, including the Series 2023A bonds.
The city expects to retire a handful of fossil fuel-dependent power plants by the end of 2030. That will create the need for an additional 1,975 megawatts of electricity generation, or more than double the peak daily demand in July 2021. The city will fill the need with renewable energy, while still retaining some fossil fuel-powered plants. CSU expects 35% of new generation in 2030 to come from solar, 32% from wind, 15% from battery storage facilities, and 18% from gas-fired facilities.
The bonds are special obligations of the city, payable by revenue from its utilities systems.
Goldman Sachs & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $406 million. The price reflected a premium of $42 million.