Editors Note: This article was originally published in the July 26, 2023 issue of the Chronicle Progress. Some information may be outdated.
Intermountain Power Agency reported it had sold a second tranche of tax exempt and taxable bonds earlier this month to fund construction of its new natural gas and green hydrogen power plant.
IPA board members heard a presentation about the bond sale last week during a regular meeting of the board.
Initially, IPA had planned to price about $547 million in new municipal bonds. However, investors showed so much interest in the instruments, IPA’s representatives chose to upsize the bond float to more than $830 million.
“We had a total subscription (a show of interest and willingness to buy) of over $3 billion for our tax exempt and our taxable. It was $2.9 billion for our tax exempt, that was from 70 different investors. Our taxable were $282 million from 22 investors. Great response,” said IPA treasury manager Vance Huntley.
IPA issued almost $800 million in municipal bonds in May 2022.
Among the investors who expressed the most interest were Wall Street titans such as Goldman Sachs and Vanguard.
“We were able to get good exposure. We had a Bloomberg article come out on Monday,” Huntley told the board. Also, securities ratings agency Moody’s did an extensive write-up ahead of the sale, he added.
Because some investors were willing to pay a premium for higher yield coupons, IPA actually raised more than what the upsized sale was initially priced.
Huntley said IPA actually received a total of $932 million. Of that, $772 million will be used for construction activities. IPA will pay 4.09 percent in financing costs for the issuance, only a few hundred basis points higher than last May’s 3.95 percent in financing costs, he reported.
“And that will take us through November of next year,” he told IPA’s board. “So we’ll be hitting the market again sometime in the fall of next year.”
Huntley said one more bond sale should finalize the remaining financing needed to finish construction on the new plant.
Nick Tatton, IPA board vice chair, was effusive in praising the results from the bond sale, specifically noting that at the same time a school district in Texas was bringing some $900 million in tax exempt bonds to market.
“It was very, very obvious how well the market liked our bonds,” he said. “You mentioned Denton, Texas, they had to go to a lot higher interest rate and I don’t think they even sold all their bonds that day. I think that just speaks to how well-liked this project is… it was a home run.”
IPA General Manager Cameron Cowan said IPA is a well-respected name in the market, mostly because of how little the agency actually goes to Wall Street to sell public debt.
“We’ve issued bonds periodically over the years and they’ve been very well received. It’s a strong credit,” he said.
In a related note, an audit presentation provided during the same meeting, included the fact that the remaining $25 million in notes which financed the original construction of IPA’s existing coal units, opened in 1986, was finally paid off.
“I’m happy to report that that number is now zero as of July 1,” said Linford Jenson, IPA’s accounting manager. “The last of the subordinated notes payable to Los Angeles or and the City of Pasadena were paid. That constituted the last payment of the old debt on the coal-fired units. I think that’s a historic milestone, I kind of celebrated that.”
