“We put our service providers on notice that when they enter into a contract with us they are confirming they are in compliance with all relevant state laws,” he said.
He said that the authority has not yet seen any pricing impact because of the limited competition of underwriters. “We had robust underwriting syndicates and we got excellent pricing,” he said.
August Deal
The RFP was distributed on April 8 and firms have until Wednesday to provide “indications of intent to respond.” They have to ask any questions by April 15, and the formal submissions are due April 22. Banks will then be evaluated and interviewed between late April and early May, and a selection will be made at a upcoming board meeting, the date of which is not yet determined.
Proceeds of the sale will used by eight gas utilities to pay for the “extraordinary cost of natural gas” due to high-demand caused by Winter Storm Uri, according to the RFP. The bonds are expected to be sold by mid-August.
Some gas utilities incurred enormous losses during the 2021 event when bitter cold crippled the second-largest U.S. state’s energy infrastructure and prices for the fuel soared to levels never seen before. As a result, lawmakers last year approved a process known as securitization that will allow repayment to be spread out over decades, easing the financial impact on homeowners and other customers.
The bonds probably will cost customers of the utilities involved about $1.25 a month instead of hundreds of dollars at one time.
In the RFP document, banks are asked how many deals they’ve underwritten nationally and in Texas in the past five years, plus how many transactions over $1 billion they have either senior managed or co-managed. And firms applying to lead the transaction are even asked to recommend their peers.
“If your firm was not chosen to be the book-running Senior Manager for the proposed financing, what firm would you recommend to be the book-running Senior Manager?” the RFP asks.
--With assistance from Joe Mysak and Sergio Chapa.
This article was provided by Bloomberg News.