A cooperative district that supplies energy to the southeast United States sold $942.6 million in bonds to finance the purchase of a long-term supply of natural gas.
The bonds, issued by Energy Southeast, Alabama, mature between 2026 and 2054, yielding between 4.31% and 4.5%. They are subject to mandatory tender in 2032. The securities received a rating of A1 from Moody’s Investors Service, A- from S&P Global Ratings, and A+ from Fitch Ratings.
Moody’s analysts said the rating rested on the credit quality of Morgan Stanley, which acted as guarantor of the transaction.
Energy Southeast will use the bond proceeds to prepurchase a thirty-year supply of natural gas that it will sell to its 11 member municipalities, all of which are located in Alabama.
The bonds are special, limited obligations of Energy Southeast, payable by revenue from energy sales. The cooperative district recorded $238.9 million in operating revenue last fiscal year, almost all of which came from the sale of electricity to participating members.
Morgan Stanley & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $983.5 million. The price reflected a premium of $46.8 million and a discount of $5 million. Municipal Capital Markets Group, Inc acted as financial advisor.