Santee Cooper Board Approves $1 Billion Bond Sale
Proceeds will fund capital needs, yield $41 million in refinancing savings
MONCKS CORNER, S.C. – The Santee Cooper Board of Directors today approved the sale of approximately $1 billion in bonds to fund capital improvement projects and refinance debt issued in 2014 and 2015.
The refinancing portion of the transaction, the 2025 Tax-Exempt Refunding Series B, totals $421 million and refinances higher-cost debt issued in 2014 and 2015. The refunding transaction will achieve approximately $41 million in gross debt service savings for customers through 2048. This future value savings figure equates to net present value savings of over $27 million, or 5.96% of the par amount of refunded bonds.
The transaction also includes approximately $542 million in tax-exempt bonds (2025 Tax-Exempt Improvement Series A) and $58 million in taxable bonds (2025 Taxable Improvement Series C). Most of these proceeds will be used to fund Santee Cooper’s capital needs related to transmission, generation and distribution systems and environmental compliance.
The all-in true interest cost is 4.46%. The improvement bonds fall within the approved parameters approved by the South Carolina Joint Bond Review Committee.
The transaction received strong investor demand, with investor orders totaling over $8 billion. The significant oversubscription allowed Santee Cooper to increase the bond offering and reduce interest rates.
“With expert guidance by our Treasury group and team of underwriters and advisors, we were able to schedule this offering after two major developments, an improved credit outlook from two of the major agencies and a settlement with customers, subject to Court approval, on our ability to collect certain costs related to events outside our control that occurred during our recent rate freeze,” said Ken Lott, Chief Financial and Administrative Officer. “The strong investor response, and the resulting ability to increase new money and savings, are great developments for all Santee Cooper customers.”
The transaction was led by BofA Securities. Other senior managers were J.P. Morgan Securities LLC and Barclays Capital Inc. Co-managers included American Veterans Group, PBC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, TD Securities (USA) LLC, and Wells Fargo Bank. PFM served as financial advisor.
Michael Mace, financial advisor and senior director of PFM, credited a combination of very positive Santee Cooper credit developments and a good bond market tailwind for results that exceeded expectations. “This was a very successful transaction, by any metric,” Mace said.
