Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Finance Bonds topic
No spam. Unsubscribe anytime.
PUC says recent water bond sales lower borrowing costs, projects $58 million savings over 30 years
Summary
Assistant GM and CFO Todd Reitstrom told the commission that competitive sales of $375 million in water revenue bonds produced a blended borrowing rate of about 4.54%, generating roughly $1.9 million a year in debt-service savings and an estimated $58 million over 30 years.
Todd Reitstrom, assistant general manager and chief financial officer for the San Francisco Public Utilities Commission, told commissioners on Sept. 8 that the PUC’s most recent competitive water bond sale drew strong investor demand and will lower the agency’s borrowing costs.
Reitstrom said the Sept. 1 competitive sale offered $375,000,000 of par-value bonds, with nine bidders registering and seven submitting active bids. He said the winning bid came from a JP Morgan-led syndicate at a combined borrowing rate of about 4.54 percent. “Very good news,” Reitstrom said, noting the sale produced a roughly $22,000,000 premium and, together with an August sale, will translate into about $1,900,000 a year in savings and roughly $58,000,000 over 30 years.
Why it matters: Lower borrowing costs reduce projected debt-service outflows for water projects and can ease long-term pressure on rates. Reitstrom said the savings will begin to be felt around 2014–2015 and continue over the life of the 30-year bonds.
Supporting details: Reitstrom told the commission the size of the sale and market conditions encouraged underwriters to form syndicates; he named Ramirez & Company, Dela Rosa, and Crowell, Wheaton & Company as members of the winning group. He also noted that the PUC will soon enter the market to issue bonds for a new headquarters building, a roughly $167,000,000 offering to be priced in late September and close in early October.
Commission response: Commissioners praised staff work on the sale and asked that Reitstrom’s updated debt-service projections be incorporated into the PUC’s 10-year financial model. Reitstrom confirmed that the new bond results would be reflected in upcoming rate-forecast materials.
Next steps: Staff said it will return with financing details for the headquarters bond sale and follow the commission’s direction to update long-term rate projections.
