The Public Energy Authority of Kentucky (PEAK) issued $1.11 billion in bonds to refund previously issued securities and finance the purchase of a long-term supply of natural gas.
The bonds mature between 2025 and 2055, yielding between 4.07% and 4.15%. They have a mandatory tender in 2032 and pay interest at 5%. The securities received a rating of A1 from Moody’s Investors Service.
PEAK will use the issuance proceeds to refund bonds that it sold in 2018. Those bonds were used to finance the purchase of a thirty-year supply of natural gas from BP Energy Company. PEAK then sells that gas to its member communities.
The authority will also use the bonds to fund the acquisition of additional quantities of gas under its agreement with BP.
PEAK has deals with other gas suppliers, including subsidiaries of Goldman Sachs. The issuance follows PEAK’s February sale of $654 million in bonds, which it used to buy a long-term supply of natural gas from such a subsidiary.
PEAK provides energy throughout the state from its base in the cities of Carrollton and Henderson, both of which are on the border with Indiana.
Morgan Stanley & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $1.17 billion. The price reflected a premium of more than $60 million. Municipal Capital Markets Group, Inc acted as financial advisor.