The Louisiana Utilities Restoration Corp./ENO will issue about $209.3 million in storm recovery bonds, secured by storm recovery property to recoup storm recovery costs.
J.P. Morgan Securities is the lead underwriter on the deal, which will issue bonds through the Louisiana Local Government Environmental Facilities and Community Development Authority/ENO, which is a political subdivision of Entergy New Orleans (ENO), according to Moody's Investors Service.
The Louisiana Utilities Restoration Corporation (LURC) has the right to impose, bill and collect storm recovery charges on all of Entergy New Orleans' existing and future retail electric customers until the bonds are repaid in full, in accordance with a financing order that was finalized in November 2022, according to Moody's. Proceeds from the sale of the bonds will be used to replenish and fund Entergy New Orleans' storm recovery reserves that had been depleted after Hurricane's Zeta and Ida, plus reimbursing upfront financing and other costs associated with the deal.
The trust will issue just one tranche, according to the rating agencies planning to assign ratings, which includes S&P Global Ratings. Without subordination or sequential payments, like in other transactions. Instead, the notes will benefit from a true-up adjustment, wherein the trust will adjust the storm recovery charges at least on a semiannual basis.
Another benefit to the notes is that the storm recovery charge is relatively low. ENO expects the 2022 securitization initial charge to represent around 3% of a 1,000-kilowatt hour residential customers' total electricity bill. Further shoring up confidence in the notes' repayment, the rating agencies view ENO as a stable and experienced servicer, with more than 90 years of experience.
Louisiana Local Government Environmental Facilities and Community Development Authority/ENO will issue just one tranche of notes, according to the rating agencies. For its part, Moody's intents to assign a rating of 'Aa1', while S&P expects to assign a 'AAA'.
The recovery bonds have an expected final maturity date of September 2037, the rating agencies said.
