The Western Minnesota Municipal Power Agency (WMMPA) recently closed on power supply refunding bonds of approximately $43.2 million.
The 2022 WMMPA Series A Revenue Refunding Bonds resulted in annual savings of approximately $823,000 through 2030, or nearly $6.6 million total. Net present-value savings are over $5.7 million, or 11.6 percent of the refunded bonds. Nearly $4.2 million of the savings is attributable to the termination of an interest rate swap executed in 2020, which was an integral part of the refunding process.
Chris Olson, vice president and CFO at Missouri River Energy Services (MRES), noted that 24 different investors submitted bids for the 2022 Bonds, which resulted in total orders exceeding seven times the amount of the initial offering.
“This refunding allowed us the opportunity to substantially lower our debt service on the pre-existing bonds and reduce our long-term interest costs,” Olson said. “Strong investor demand for the bonds, WMMPA’s solid credit ratings, and terminating the interest rate swap were key factors in achieving these savings,” Olson noted.
Moody’s Investors Service recently upgraded WMMPA to a rating of Aa2 from Aa3 with a stable outlook on WMMPA’s power supply revenue bonds. At the same time, Fitch reaffirmed its AA- rating with a stable outlook.
WMMPA is a municipal corporation and political subdivision of the State of Minnesota and has financed the construction and acquisition for all of the electric generating and transmission facilities used to serve the municipal members of MRES. The 24 members of WMMPA also are members of MRES.
MRES is a not-for-profit joint-action agency that provides wholesale electricity and energy services to 61 member municipalities in Iowa, Minnesota, North Dakota, and South Dakota. All MRES members own and operate local electric distribution systems.
WMMPA and MRES have a power supply agreement under which WMMPA sells to MRES all of the output of its generating and transmission facilities. MRES provides all administrative services for WMMPA.