Santee Cooper bond sale will finance nuclear upgrades

  • Wednesday, August 14, 2013

The Santee Cooper Board of Directors approved the sale of $1,341,385,000 in revenue obligation bonds during a special board meeting last week.
The 2013 Series ABC included $252,655,000 in tax-exempt Series A, $388,730,000 in tax-exempt Refunding Series B, $250,000,000 in taxable Series C and $450,000,000 in taxable Series D bonds (LIBOR Index Bonds).
The term “tax-exempt” means exempt from federal and South Carolina income taxes for South Carolina residents under current law.
The all-in true interest rate for Series A and B is 5.32 percent and the bonds mature from 2033 through 2043. The all-in true interest rate for Taxable Series C is 5.83 percent.
Series D constituted $450 million in taxable floating rate notes tied to the London Inter-Bank Offered Rates. The notes mature in 2015 and 2016.
“Markets have been adjusting to the potential of a less accommodating federal reserve by raising the interest rates that issuers pay to borrow money,” said David Levy, managing director at Goldman Sachs and Co. “Santee Cooper effectively responded to the broader market conditions by selling debt where investors had very strong demand, and as a result received an exceptional investor response with over 60 high-quality institutional investors expressing interest in owning its credit.”
“Due in large measure to the execution in May 2013 of the amendment to the Coordination Agreement with Central Electric Power Cooperative, we successfully executed the largest bond issue in our history,” said Jeff Armfield, Santee Cooper senior vice president and CFO.  “We were able to issue new debt and restructure a portion of our existing debt at attractive rates over a longer period, resulting in savings for all Santee Cooper customers.
“Our initial plan was to sell $1.745 billion with maturities from two to 40 years. Market pricing for debt up to 30 years fit within our plans. Beyond 30 years, however, investors were seeking higher interest rates than we felt were reasonable.
“We adjusted our offering by removing the longer maturities and increasing bond size in years where the rates were most advantageous.”
The new money will be used primarily to help finance Santee Cooper’s share of costs to build two new nuclear power units at V.C. Summer Nuclear Station and to make required environmental upgrades. The Final Official Statement for these bonds will be available by contacting Santee Cooper Bondholder Relations at 1-877-246-3338. It will also be posted at
The issue drew ratings of AA- from Fitch Ratings and Standard and Poor’s, and an A1 from Moody’s Investment Service.
Lead banks on the transaction were Goldman Sachs and Co., Barclays and Morgan Stanley. Other banks involved were BofA Merrill Lynch, Citigroup, J.P. Morgan and Wells Fargo Securities.
Santee Cooper is South Carolina’s largest power producer, the largest Green Power generator and the ultimate source of electricity for 2 million people across the state.

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