The bonds were issued to prepay the cost of acquisition of a fixed quantity of natural gas to be delivered over 30 years. The Black Belt Energy project participants will service the debt service through their routine natural gas utility payments, and the District will receive a discount for prepaying for gas over a long period of time.
BP Gas will serve as the gas supplier and will enter into a Prepaid Natural Gas Purchase and Sale Agreement with the District.
The bonds were rated “A1” by Moody’s, unconditionally guaranteed by BP.
The bonds were structured as serial bonds from 2026 to 2034, and a term bond maturing in 2055 with a mandatory tender on November 1st, 2034.
This was a two-handed transaction, with Blaylock Van receiving 10% of the transaction’s liability.
The buyer base was composed of frequent prepaid gas dealers.
The Firm submitted $73.700 million in total orders, including $23.70 million in going away orders from four institutional accounts.
The overall tone of the government market remained positive to neutral throughout the day.
The novelty of the transaction drove strong investor demand, resulting in 2x oversubscription for the put term bond and oversubscription ranging from 1x to 6x for the serial bonds. Oversubscription permitted spreads tightening between 2-6 bps.
