Title
Credit Facility for GRU’s Series D Taxable Commercial Paper Notes (B)
Explanation
On June 15, 2000, the City Commission adopted Resolution No. 991387 authorizing GRU to issue Series D Taxable Commercial Paper Notes in an amount not to exceed $25,000,000 and execute related legal documents including a Credit Agreement with SunTrust Bank to provide liquidity support for the Commercial Paper. In addition, on February 19, 2009, the City Commission adopted Agenda Item No. 080805 authorizing GRU to issue additional Series D Taxable Commercial Paper Notes in an amount not to exceed $25,000,000 at any time outstanding in order to finance capital projects that are included in GRU’s then-approved capital budget and that, under applicable federal income tax laws and regulations, may be financed only on a taxable basis, subject to the limitations contained therein.
The Credit Agreement with SunTrust expires on September 11, 2014, and must either be renewed with SunTrust or replaced with a facility from another provider.
Since we entered into the existing agreement, SunTrust’s credit ratings, both long term and short term, have been downgraded. This lower credit rating will likely give prospective investors buying the commercial paper concern, requiring a higher yield at an additional cost to GRU. If GRU were to replace SunTrust with a bank that has a higher short term rating, as liquidity provider, it is very likely that GRU’s commercial paper would be placed with investors at lower rates. GRU does plan to issue commercial paper over the near term. We believe it is beneficial to GRU and our customers to obtain a higher-rated replacement provider for GRU’s Series D Taxable Commercial Paper.
Accordingly, on March 17, 2014 GRU issued a Request for Information soliciting information from various commercial banks relating to the replacement of the credit agreement for the Series D Taxable Commercial Paper Notes.
Five banks responded to the RFI:
· State Street Bank...
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