A Louisiana state authority issued $104 million in bonds to finance a sustainable energy production facility.
The Louisiana Local Government Environmental Facilities and Community Development Authority sold the bonds in two series. Both the Series 2023 bonds, consisting of $44 million, and the remarketed Series 2021 bonds, consisting of $60 million, mature on December 1, 2046. They have a mandatory tender date of March 22, 2024, and pay interest at 4%. The securities received a rating of Aaa/VMIG-1 from Moody’s Investors Service.
The securities “will yield an amount, together with the interest income therefrom, sufficient to pay the principal of and interest on the bonds on the scheduled mandatory tender date,” according to the official statement accompanying the sale of the bonds.
The authority will loan the bond proceeds to a company, American Biocarbon CT, to pay for a biorefinery plant that will turn sugarcane waste and other agricultural waste into biocarbon products which can be used for fuel.
The issuance comes as climate change spurs innovation (and investor interest) in green technologies. Experts say replacing fossil fuels with biofuels could reduce greenhouse gas emissions and dependence on foreign energy producers. Biofuels have particular utility in transportation, but can also be used for heating and traditional electricity generation, according to the U.S. Energy Information Administration.
U.S. lawmakers have taken note. The Inflation Reduction Act, the President Joe Biden administration’s hallmark climate legislation, contains $9.4 billion for biofuels through 2031. Demand for the fuel increased by 6% last year, according to the International Energy Agency.
The bonds are special, limited obligations of the authority, secured by revenue from the loan between the issuer and American Biocarbon CT.
Jefferies LLC served as underwriter on the issuance, purchasing the bonds for par.