Power Agency Prices $149M

After exploring a deal with a sizable Build America Bond component, the Guam Power Authority Tuesday priced $149.1 million in senior revenue bonds entirely as tax-exempt debt.

“Clearly there was a value to the triple tax-exemption, and we had a lot of buyers that were existing GPA buyers,” said the authority’s financial adviser, Aulii Limtiaco of Pacific Public Finance Group LLC.

Interest on tax-exempt debt from issuers in the U.S. territory is exempt from state and local income taxes, in addition to federal tax.

The deal came with a three-way split rating: Ba1 from Moody’s Investors Service, BBB-minus from Fitch Ratings, and BBB from Standard & Poor’s. Assured Guaranty Corp. agreed to insure the senior debt, but the deal team ended up insuring a single $55 million maturity.

“There’s a lot of people interested in getting a good yield,” GPA chief financial officer Randy Wiegand said Monday.

The GPA’s senior uninsured bonds priced with yields of 5.6% for 2030 maturities and 5.73% for 2040. The 2037 maturity, insured by Assured Guaranty, priced to yield 5.22%. The insurer has ratings of AAA from Standard & Poor’s and Aa3 from Moody’s

The authority also priced $55.8 million in taxable subordinate debt Tuesday, with a top yield of 7.5% for the 2015 maturity.

Morgan Stanley ran the books.

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