The Nebraska Public Power District (NPPD) issued almost $150 million in bonds to refund a previous issuance and fund capitalized interest.
The bonds mature on July 1, 2028. They have a coupon rate of 5% and yield 3.12%. The securities received a rating of A+ from Fitch Ratings, A1 from Moody’s Investors Service, and A+ from S&P Global Ratings.
While the rating reflects “the utility’s strong financial profile and statewide customer base, which generates a mix of wholesale and retail revenues,” it is “heavily influenced and constrained by termination provisions in NPPD’s all-requirements wholesale contracts, which permit wholesale customers to reduce purchases to zero over a six-year period if NPPD’s rates do not remain competitive compared with a national benchmark.”
The issuance comes two years after the utility adopted a goal to become carbon neutral by 2050. Provisions in those contracts could reflect broader concerns over the green transition, as power utilities across the United States attempt to balance the need to use less carbon to stave off climate crisis and the high costs of renewable energy resources. The utility’s energy mix, which consists of several nuclear, hydroelectric, and wind projects, is already 56% carbon-free.
Fitch notes that the utility’s present wholesale rates are close to the benchmark rate, and that there is low risk wholesale customer departure in the “near term.”
The bonds will be backed by revenue from the utility, which generated more than $1.1 billion last year.
BofA Securities Inc, Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC served as underwriters on the issuance.