Entergy Louisiana will service a $242.8 million securitization of storm recovery charges.

The restoration bonds, Series 2014 will be issued by the Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA), part of the government of the State of Louisiana.

Proceeds from the bonds will be issued to finance costs incurred by the Louisiana utility repairing facilities damaged by hurricanes. The bonds are backed by future surcharges that the utility is allowed to impose on customers' electricty bills to recover so-called "stranded" costs.

Moody’s Investors Service has assigned a preliminary ‘Aaa’ rating to both the $91 million of class A1 notes, which have a final maturity of February 2022 and the $152.7 million class A2 notes, which have a final maturity of August 2028.

This will be the fourth securitization serviced by Entergy, which will use the proceeds of the transaction to replenish storm damage reserves and to fund reimbursement of system restoration expenses, according to Moody’s.

Hurricanes Katrina and Rita, which struck Louisiana in 2005, caused widespread damage to the utility and led the Louisiana legislature to authorize storm recovery bonds.  

Entergy Louisiana collects the system restoration charges from the ratepayers in its service area. Credit enhancement for the deal relies on true-up mechanism, which allows tariff to be adjusted up or down to account for fluctuations in consumption from the prior six or 12 months. This adjustment helps to ensure adequate cash flow will be available to make scheduled principle payments.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.