FMPA Bond Refinancing Saves $63.7 Million
Demand for bonds outstrips supply, reflecting FMPA’s desirability as an investment
ORLANDO, Fla., Feb. 18, 2016 – Florida Municipal Power Agency (FMPA) moved quickly to take advantage of a favorable interest rate market selling $424 million in municipal bonds yesterday to refinance existing bonds for its All-Requirements Project. The refinancing netted $63.7 million in gross savings, which was more than FMPA originally expected.
The savings exceeded FMPA’s original projections when FMPA’s All-Requirements Project member cities approved the refinancing on Jan. 21. FMPA completed the bond issue in a shorter-than-normal timeframe to take advantage of a favorable interest rate market for bond issuers.
The savings will reduce future costs for the cities in FMPA’s All-Requirements Project. In the coming three fiscal years, savings are expected to be approximately 57 cents per megawatt hour increasing to approximately 87 cents through the final maturity in October 2031. The final maturity date for the refunding bonds is the same as the original issues being refunded.
When FMPA offered the bonds, it had nearly $2 billion in orders for the $424 million issue. The five-to-one demand ratio is a positive statement on FMPA’s desirability as an investment and aided the issue’s cost effectiveness.
The bonds received strong credit ratings of A+ from Fitch Ratings and A2 from Moody’s Investors Service. In granting the high ratings, both rating agencies pointed to the steady improvements in the All-Requirements Project’s rate competitiveness and satisfactory financial performance. FMPA’s All-Requirements rates have decreased 30 percent since 2009, allowing a number of the cities it serves to maintain retail rates among the lowest in Florida.
The bonds were underwritten by Bank of America Merrill Lynch and Wells Fargo Securities in a negotiated sale. Closing is scheduled for April 5, 2016.
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Florida Municipal Power Agency (FMPA) is a wholesale power company owned by 31 municipal electric utilities. FMPA provides economies of scale in power generation and related services to support community-owned electric utilities. The members of FMPA serve approximately two million Floridians.