DALLAS – Texas had strong demand for $810 million of top-rated bonds used to fund a new water development program, a state official said.
“The bond sale of the State Water Implementation Revenue Fund for Texas (SWIRFT) was extremely successful,” said Bech Bruun, chairman of the Texas Water Development Board. “There was enormous interest in our bonds because of the AAA rating and the reputation of the agency and its borrowers.”
Offered in two series, the bonds were more than 2.5 times oversubscribed, Bruun said, with heavy demand from institutional investors.
“On the Series 2015A Bonds, there were approximately $2.1 billion in orders received for over $798 million in par amount,” Bruun said. “On the 2015B Bonds, there were over $28 million in orders for just under $12 million in par amount.”
Series A bonds maturing in 2050 drew yields of 3.85% on 4% coupons. Bonds maturing in October 2020 earned yields of 1.35% on 5% coupons.
“The maturities through 2022 were more oversubscribed, with the 2020 maturity being the most popular,” Bruun said.
The bonds are the first issued under a voter-approved program called State Water Implementation Fund for Texas. The bonds priced through negotiation Oct. 7 with senior manager Citi, led by managing director David Houston. Anne Burger Entrekin, managing director at First Southwest Co., was co-financial advisor with Paul Jack, managing director at Estrada Hinojosa & Co.
The SWIFT program was created through the transfer of a one-time, $2 billion appropriation from the state's Rainy Day Fund. The $2 billion will be leveraged with revenue bonds over the next 50 years to finance approximately $27 billion in water supply projects.
“We will be approving the terms for our financial commitments to communities at our Oct. 13 board meeting,” Bruun said. “Based on the success of this year’s sale, SWIRFT promises to be a successful program for Texas and investors alike.”
