Municipality Of Anchorage Issues First Commercial Paper Program Notes For Municipal Light & Power $25,000,000
On Thursday August 2, 2012, the Municipality issued the first Notes under the newly established Commercial Paper (CP) Program for the Municipal Light & Power (ML&P) utility. The $25 million dollar issuance was met with solid interest from the investment community. The initial Notes have a term of eight months and an interest rate of 0.23%.
A CP program is a frequently used short-term financing tool for interim financing of capital projects and construction programs and is usually refunded by the issuance of long-term bonds, as is planned for the ML&P CP Program. The short-term CP notes and the long-term revenue bonds will be secured by revenues of ML&P and are not a general obligation of the Municipality of Anchorage. The cost savings of using an interim short term financing program prior to the issuance of long term revenue bonds is expected to result in significant savings for ML&P ratepayers. For example, the annual debt service on $150 million of long term revenue bonds is $9.6 million while the forecasted cost of operating the CP Program, in lieu of selling long term revenue bonds, in calendar year 2013 is $1.3 million, a savings to ratepayers of $8.3 million.
Chief Fiscal Officer, Lucinda Mahoney noted, “We are very pleased with the interest rate we received from the investors for our initial issuance of CP Notes for ML&P. This CP Program will help keep rates low for ML&P ratepayers.”
“This CP Program, interest from investors and the credit offered to the Municipality by the banking community demonstrate the continued marketplace confidence in the Municipality of Anchorage and ML&P as well as the outstanding management of the Municipality’s fiscal affairs,” Mayor Sullivan said. “I congratulate the Public Finance staff for a successful first issuance of CP Notes for ML&P.”