The Lower Colorado River Authority (LCRA), a Texas power utility, sold $138 million in bonds to refund a previous issuance.
LCRA issued the bonds in two series. The Series 2023A bonds, consisting of $30 million, mature between 2024 and 2027, with yields between 3.05% and 3.38%. They have a coupon rate of 5%. The Series 2023B bonds, consisting of $108 million, mature on May 15, 2039. They have a coupon rate of 5% and yield 3.35%. The bonds received a rating of A from S&P Global Ratings and AA- from Fitch Ratings.
“Inflationary cost pressures associated with fuel and purchased power costs have been passed through to wholesale customers through LCRA’s monthly fuel-rate adjustment, providing a key protection to the generation business operating income levels,” according to Fitch.
The issuance comes as Western states negotiate to share access to the evaporating Colorado River, which is a major contributor to their economies. It is also a major provider of energy and drinking water to 40 million Americans in seven states.
While Texas is not dependent on the Colorado River for water or energy security, it still provides a significant amount of the state’s power. The LCRA is the largest public power provider in Texas.
The bonds will be backed by revenue from the authority, but will not constitute a general indebtedness of LCRA or the state of Texas. Last year, LCRA generated more than $1.2 billion in operating revenue.
Barclays Capital Inc served as lead underwriter on the issuance.