DALLAS — Utah’s Intermountain Power Agency, a key supplier to California utilities, hopes to sell nearly $72 million of subordinated revenue bonds through a competitive deal on Wednesday.
The new issue refinances 1998 and 1999 Series A bonds.
Bids are due 9:30 a.m. Mountain Daylight Time, with George K. Baum & Co. acting as financial adviser. The agency could increase or decrease the size of the issue by $3 million and reserves the right to postpone the sale, according to the preliminary official statement.
Maturities run from 2011 to 2019. Bonds maturing after 2015 are callable, while those coming due before that are not.
Bond counsel Orrick, Herrington & Sutcliffe has certified the bonds as tax-exempt.
Ratings of A1 from Moody’s Investors Service, A-plus from Standard & Poor’s, and AA-minus from Fitch Ratings have been affirmed.
Standard & Poor’s upgraded the subordinated debt one notch from A last March when the agency issued $260 million of subordinated refunding bonds.
That deal was preceded by $426 million of subordinated debt in 2008, of which $351 million is outstanding. Of the $132 million of subordinated bonds issued in 2007, $128 million is outstanding.
The IPA’s 2008 deal was a $426 million refunding in April that took out $60 million of auction-rate securities and $350 million of variable-rate bonds issued in 1998.
Despite the potential impact of federal carbon cap-and-trade legislation, Standard & Poor’s analyst Peter V. Murphy maintained a stable outlook that “reflects the continued strong ratings of the California member cities, coupled with no significant power recall.”
While IPA’s senior-lien indenture dating back to 1978 is still technically available, the more current subordinate indenture is more serviceable, according to analysts.
Formed officially in 1977 as a unit of the state of Utah, the Intermountain Power Agency was created as the developer of a single project, a coal-burning plant that would provide wholesale power for utilities in Utah and California.
Of the 36 power purchasers, six are California municipal electric systems, 29 are Utah municipal electric systems and cooperatives, and one is an investor-owned company.
The six California utilities buy most of the power from the Intermountain Power Project, led by the Los Angeles Department of Water and Power with 60%, followed by Anaheim with 13%, Riverside with 7.6%, Pasadena with 5.7%, Burbank with 4%, and Glendale with 2%.