MLGW issues bonds at record low interest rates

Once, again, Memphis Light, Gas and Water bonds have been recognized by the market as an excellent investment.

After a process of several months to develop and approve the sale of bonds, MLGW issued $110 million in bonds on Aug. 16 with record low interest rates of 2.459 percent for each of the electric and gas divisions and 2.322 percent for water.

“I haven’t gone all the way back in MLGW’s history,” said MLGW Vice President, Chief Financial Officer and Secretary-Treasurer Dana Jeanes, “but I sincerely believe this is the lowest cost of debt we’ve ever had.”

By MLGW’s charter, each division within the utility is financially independent in regards to issuing credit. As a result, Standard & Poor's and Moody’s Investors Service rating agencies assessed each credit separately.

The electric division was rated AA+ by the S&P 500 and Aa2 by Moody’s. Gas received AA- and Aa1 ratings, respectively. Water was assessed by the S&P 500 as AAA credit — the agency’s highest rating — and Aa1 by Moody’s.

Since the gas division had not issued any bonds since 1984 the rating agencies rated gas division bonds similar to a new credit. Nevertheless, the market viewed the bonds favorably, resulting in an identical interest rate as the electric division.

Funds from the bond issuance will be used in support of MLGW’s capital investment budget.