The Missouri Joint Municipal Electric Utility Commission sold $94.2 million in bonds to refund bonds that financed the Iatan 2 Project, a coal-fired power station.
The bonds mature between 2025 and 2034, yielding between 3.65% and 3.92%. They received a rating of A from Fitch Ratings and A2 from Moody’s Investors Service, which assigned a stable outlook.
“The stable outlook reflects the expectation that the project will continue to contractually recover all project costs in a timely manner from its participants, with the expectation that the participants’ weighted average credit quality will remain stable, and the Project will generate stable operating cash flow and maintain credit metrics consistent with the rating category,” according to Moody’s.
Iatan 2 is expected to remain profitable even amid a nationwide shift away from burning coal, the most carbon-intensive fossil fuel. The burning of fossil fuels is the primary driver of climate change, and renewable energies are gaining in popularity. The commission is planning to retire an affiliated coal-fired power plant, Iatan 1, in 2039.
Fitch analysts wrote that “proposed federal regulations to limit carbon emissions could require significant capital spending or limit dispatch increasing the project’s cost burden.”
The Missouri Electric Commission serves 72 municipal utilities in the state. The bonds are special limited obligations of the commission, payable by power purchases by those municipalities.
RBC Capital Markets LLC served as lead underwriter on the issuance, purchasing the bonds for $99 million. The price reflected a premium of $5 million.