Texas Co-op Secures $150M Through Cooperative Securities

This fall, Guadalupe Valley Electric Cooperative (GVEC) successfully completed a $150 million private placement of Electric System Bonds, arranged by Cooperative Securities, a wholly owned subsidiary of CFC affiliate NCSC.  

Priced on Aug. 22 and funded on Sept. 30, the transaction was a strong execution for the Texas-based transmission and distribution cooperative, achieving the tightest credit spread versus other electric cooperative private placement transactions at similar tenors since 2022. A private placement involves raising capital by selling securities directly to a select group of investors. 

The NCSC subsidiary is a separate broker-dealer that provides placement agent services to electric cooperatives and their affiliates. Since its inception in 2022, Cooperative Securities has completed six transactions totaling more than $1.3 billion. 

“We’re incredibly grateful that GVEC placed their trust in us,” CFC CFO Ling Wang said. “Cooperative Securities is a new broker-dealer, and while we had completed five transactions prior to this one, we’re still in the early stages of building our track record. GVEC’s confidence in our ability to deliver was meaningful, and from the outset, we understood their goals, which allowed us to stay focused and streamline the process.” 

The offering, rated AA-, attracted strong investor interest, generating $243 million in orders for a 1.6x oversubscription. Five investors participated, including two large insurers, CFC, and two mid-sized insurers. The bonds, with a 30-year final maturity and customized amortizing structure, were priced at a 5.56% coupon, reflecting strong investor confidence in GVEC’s credit quality and financial strength. 

“Competition for GVEC’s financing needs is essential,” GVEC CEO and General Manager Darren Schauer said. “As a fast-growing cooperative, we want to make sure we’re getting the best deals for our members, and private placements offer another source of competition for our financing needs.” 

GVEC first entered the private placement market in 2005, but this marked its first transaction with Cooperative Securities. With deep knowledge of the cooperative model, Cooperative Securities streamlines the financing process and tailors each transaction to the unique needs of the cooperative. 

“This private placement transaction was absolutely the easiest we have ever done in the history of GVEC,” GVEC CFO Gary Korn said. “Not only was it the easiest, it had the lowest issuance costs we’ve experienced during our long history of accessing this market.” 

Proceeds from the transaction will be used to pay down short-term debt, supporting GVEC’s continued growth and capital investment. GVEC’s electric service territory spans 3,500 square miles across 13 counties in South Central Texas, serving more than 120,000 electric customers and approximately 30,000 internet customers.