VELCO’s Best-on-Record Bond Sale Results Save Ratepayers Millions
Rutland, VT—Vermont Electric Power Company (VELCO) has completed a $120 million bond sale, acting as manager of Vermont Transco, LLC. The pricing VELCO secured in the transaction represented the most attractive pricing on record in the U.S. private placement bond market, an outcome that will save electricity customers in New England millions of dollars. The proceeds from the sale of these First Mortgage Bonds will refinance short term indebtedness necessary for construction of electric transmission grid reliability projects.
The bonds were sold in two tranches–$55 million in 30-year bonds at a fixed coupon rate of 3.85% and $65 million in 40-year bonds a fixed coupon rate of 3.9%. These results represents the most attractive pricing on record for an issuer in the U.S. private placement market, according to John Daly of Manor Private Capital, LLC who managed the sale, and featured more attractive pricing that that obtained by electric utilities of comparable and even higher credit ratings in the U.S. public and private capital markets. The sale of the second tranche with a 40-year maturity was the first such transaction ever in the private placement bond market with a duration as long as 40 years.
The estimated savings over the life of the bond is approximately $20 million, when compared to the average pricing obtained by electric utilities of comparable credit quality in the U.S. public market at the time of issue in the private placement market over the last year. “This is great news for electric ratepayers and the local utility owners of VELCO”, said company President and CEO Chris Dutton. “These historically low interest rates reflect investor confidence in VT Transco’s contractual structure, VELCO’s performance record and day-to-day management, but most importantly means we will save ratepayers millions during a time when it is most needed.”
The company increased the size of the bond offering from $110,000 to $120,000 million in response to the intense investor interest and the bond sale results were realized at a time when U.S. Treasury bond yields are near historic lows. The company continues to be rated “A with Stable Trend” by DBRS.
Vermont Electric Power Company
VELCO owns, operates, constructs and maintains the high-voltage electric transmission system in Vermont. VELCO is committed to utilizing energy efficiency, power generation and system infrastructure to serve as Vermont’s transmission reliability resource.