Water Authority Executes Money-Saving $340 Million Bond Sale
June 09, 2016
The San Diego County Water Authority this week priced a $340 million bond sale that will reduce the cost of…
The San Diego County Water Authority this week priced a $340 million bond sale that will reduce the cost of financing vital water supply reliability projects over the next two decades.
When completed, the sale on Wednesday of Senior Lien Water Revenue Refunding Bonds Series 2016A&B will refund $340 million in long-term, fixed-rate bonds issued in 2008 and 2010. The Water Authority will save $63.2 million on a present-value basis over the life of the refinanced bonds. Closing of the sale is expected in about two weeks.
Separately, the Water Authority on Tuesday refinanced $86 million in a 2016 S-1 five-year, short-term refunding note, at an interest rate of 1.27 percent.
S&P Global Ratings recently upgraded the Water Authority’s senior lien credit rating to AAA, the highest offered by S&P. The upgrade marked the first time the Water Authority has achieved a AAA senior lien rating. Moody’s Investor Service and Fitch Ratings recently affirmed their credit ratings for the Water Authority of Aa2 and AA+, respectively, which are considered high quality by all standards and are held by only a few water agencies in California.
“We continue to look for ways to save ratepayers money by seeking and achieving better rates on our debt,” said Water Authority Board Chair Mark Weston. “Our high credit standing and the savings that come from it help to reduce the impact of future water rate increases by allowing the Water Authority to provide a safe and reliable water supply at the lowest possible cost.”
This week’s sale is part of a long-term plan by the Water Authority to cut the cost of financing its Capital Improvement Program. In September 2015, the Water Authority executed a $195 million senior lien refunding bond sale designed to save $15.1 million over 15 years. The Water Authority similarly executed in February 2013 a $299 million bond refunding sale that yielded $51 million in saved financing costs. In 2011, the Water Authority executed two bond refunding sales that refinanced a total of $234.4 million in bonds and were designed to save nearly $19 million combined.
Wednesday’s sales will refund bonds connected to previously completed projects in the Water Authority’s Capital Improvement Program. The Series 2016A bonds were green bonds, and they will refund debt issued to complete the Water Authority’s All-American Canal Lining Project. The sold Series 2016B bonds will refund bonds connected to various other projects already completed within the Water Authority’s Capital Improvement Program.
Combined with the current transaction, the Water Authority’s refinancing actions over the past five years will save ratepayers an estimated $148 million in debt service payments on a present-value basis over the life of the bonds.
The San Diego County Water Authority sustains a $268 billion regional economy and the quality of life for 3.3 million residents through a multi-decade water supply diversification plan, major infrastructure investments and forward-thinking policies that promote fiscal and environmental responsibility. A public agency created in 1944, the Water Authority delivers wholesale water supplies to 24 retail water providers, including cities, special districts and a military base.
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