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Nebraska Energy Supplier Sells $634 Mln in Bonds

By Munichain News Desk

An energy company in Nebraska issued $634 million in bonds to refund a previous issuance and prepay for a supply of natural gas that will be delivered over the next 30 years.

The bonds, sold by the Central Plains Energy Project (CPEP), received a rating of Aa2 from Moody’s Investors Service. They yield 4.5% and mature on May 1, 2054; however, they are subject to mandatory tender on May 1, 2032. They pay interest at 5%. 

“It is essential to the health of our members’ systems and the systems of the other governmental participants in our long-term supply projects, and essential to the natural gas consuming public that they serve, that CPEP and other municipal gas systems continue to have the option available to them to purchase long-term natural gas supplies through gas prepayment transactions,” CPEP Project Manager James J. Knight wrote in a letter to the Board of Governors of the Federal Reserve System in 2017.

The company will use most of the bond proceeds, about $540 million, to refund bonds issued in 2018. It will use an additional $112 million to fund prepayments for natural gas to be supplied by Aron Energy Prepay 25 LLC, a division of commodities broker J. Aron & Company LLC, which is owned by Goldman Sachs. 

Central Plains Energy Project is a public instrumentality of three municipal agencies in Nebraska. It provides gas in Nebraska, Iowa, and South Dakota.

Goldman Sachs & Co LLC served as underwriter on the issuance, purchasing the bonds for more than $647.5 million. The price reflected an original issue premium of $17 million and a discount of $3.5 million.

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