WASHINGTON — The District of Columbia Water and Sewer Authority, which garnered attention this summer for its historic century bond issuance, will return to the market with about $350 million of public utility subordinate lien revenue refunding bonds that are likely to price on Tuesday, its chief financial officer said.
Proceeds of the bonds will be used to advance refund series 2007A and 2008A public utility subordinated lien revenue bonds and series 2009A public utility senior lien revenue bonds. They will also be used to current refund the issuer's 2012B-1 public utility subordinate multimodal revenue bonds, which were issued in a floating rate mode and have a mandatory put date in June 2015, according to CFO Mark Kim and the preliminary official statement.
DC Water predicts the refunding transaction will result in present value debt service savings of about $30 million to $35 million under current market conditions, said Kim, who cautioned however that the amount could change significantly.
The intention is for the bonds to price Tuesday as long as market conditions do not change. The deal is expected to close the week of Nov. 17. While DC Water expects to refund about $350 million of bonds, Kim said, "If market conditions are favorable, the transaction may be larger."
DC Water provides drinking water services to the District of Columbia and provides wastewater services to D.C. as well as parts of Montgomery and Prince George's Counties in Maryland and Fairfax and Loudoun Counties in Virginia.
The authority last came to the market during the summer, when it issued $350 million of taxable century bonds and $100 million of variable rate tax-exempt bonds The century bonds were the first bonds with a 100-year maturity issued by a U.S. water utility and the first green bonds issued in the U.S. that were certified by an independent second party, Kim said.
The authority hadn't been planning to come to market so soon after the century bond deal, but "market conditions were very favorable and the potential savings are substantial," he said.
The bonds are rated Aa3 by Moody's Investors Service, AA by Standard & Poor's and AA- by Fitch Ratings, Kim said.
A six-member syndicate will underwrite the bonds. Goldman, Sachs & Co. will be book-running senior manager, and Loop Capital Markets LLC and Morgan Stanley will be co-senior managers, he said.
Squire Patton Boggs LLP and Leftwich & Ludaway, LLC are co-bond counsel and co-disclosure counsel, according to the preliminary official statement.
