Eugene, Oregon, issued $64 million in bonds to finance the needs of its electricity system.
The bonds mature between 2025 and 2053, yielding between 3.21% and 4.11%. They pay interest at 5%. The securities received a rating of AA- from Fitch Ratings, Aa2 from Moody’s Investors Service and AA- from S&P Global Ratings.
The rating reflects the city electricity system’s “very strong financial profile maintained over the last five years with continued stable operating performance through pandemic-related economic stresses, volatile hydroelectric availability and increased market energy pricing,” Fitch analysts wrote.
Eugene will use the bond proceeds to finance the relicensing of a hydroelectric power station located on national forest land. The city secured a 40-year license for the Carmen-Smith Hydroelectric Project in 2019.
As part of the deal, the Eugene committed to enhancing and managing natural resources and rebuilding public recreation facilities in the area. The city spent $17.2 million on relicensing and improvements for the project last fiscal year, and it projects spending an additional $24.2 million this year, according to the official statement accompanying the sale of the bonds.
All non-federal hydroelectric projects on federal land or navigable waterways are licensed by the Federal Energy Regulatory Commission. Licenses normally between 30 and 50 years, according to the National Forest Service.
The city may also use the issuance proceeds to refund bonds that it sold in 2012, according to Fitch.
The bonds are special obligations of the city of Eugene, payable by the net revenue from its electric system. The system generated $41.7 million in net revenue last year, according to the bond documents.
RBC Capital Markets, LLC served as underwriter on the issuance, purchasing the bonds for $69.7 million. The price reflected a premium of almost $6 million. Piper Sandler & Co acted as municipal advisor.