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SFPUC reports $424.8 million water-bond sale, lower-than-expected borrowing cost
Summary
The San Francisco Public Utilities Commission said a competitive sale of water revenue bonds produced $424.8 million in proceeds and a true interest cost of about 4.818%, which staff said would reduce projected borrowing costs and save roughly $17 million over 30 years for ratepayers.
Todd Reitstrom, chief financial officer of the San Francisco Public Utilities Commission, told commissioners the authority’s competitive water revenue bond sale yielded total proceeds of $424,800,000, above the originally authorized par amount of $375,000,000. "The total proceeds realized would be $424,800,000," Reitstrom said, and the winning bidder, Barclays Capital with a syndicate of participants, provided a lower interest rate than staff had modeled.
Reitstrom said the "true interest cost was 4.8178, rounded to, 4.818," below the commission's 5% borrowing-cost assumption used in its 10‑year financial projections. He said the lower cost and higher take-up on the offering would translate into an estimated $17 million in savings over 30 years — roughly $600,000 a year — relative to prior modeling assumptions. Reitstrom also reported that eight banks registered and six banks submitted bids; the range between the highest and lowest bids was about 10 basis points.
Commissioners asked about the sale’s credit profile and insurance. Reitstrom said the authority recently received a split rating of double-A minus from Standard & Poor’s and an A1 rating from Moody’s (one notch below "Aa" equivalent), and that the winning bidder chose not to purchase bond insurance because of the authority’s strong credit.
The commission thanked the finance team for the sale and noted staff will continue debt-management work as additional borrowings proceed in coming months. The presentation was part of the general manager’s report; no separate formal action on the bond sale was recorded at the meeting.
