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SFPUC bond refunding produced about $136 million in debt-service savings, CFO says
Summary
CFO Eric Sandler reported the water bond refunding priced on Oct. 6 refunded roughly $890 million, was 1.5x oversubscribed, and produced approximately $136 million in debt-service savings (NPV ~$107 million) with a true interest cost of 2.85%.
The San Francisco Public Utilities Commission heard a financial report on the results of a large water bond refunding that closed Oct. 6 and delivered substantial savings for ratepayers.
Eric Sandler, Chief Financial Officer, said the refunded bonds totaled about $890 million, representing roughly a quarter of outstanding water bonds. The transaction’s weighted average borrowing term was about 13 years. Sandler said strong investor demand produced an oversubscription (about 1.5x) and a true interest cost of approximately 2.85% for the deal. On a nominal basis the refinancing generated $136 million in debt-service savings through 2039; on a net-present-value basis that savings equates to roughly $107 million, or just under 12% of the par refunded.
Sandler described the outreach and marketing effort for the deal, including a local retail order period that drew about $150 million in orders from 188 retail investors and institutional participation exceeding $1 billion in orders. He credited the finance, water enterprise and communications teams for the execution.
Commissioners and the public thanked staff for the savings, and Nicole Stancula, CEO of Bosco, noted that while savings are welcome, ongoing WSIP and maintenance needs will continue to require funding.
