San Antonio Issuing $600 Million for CPS and SAWS Utilities

sa-aerial-view-credit-cps-357.jpg

DALLAS — San Antonio plans more than $600 million of issuance for its water and power utilities over the next two months, beginning with a $250 million refunding this week.

CPS Energy, the city-owned power utility, plans to price $250 million of variable rate debt Dec. 11 in two equal tranches.  Jefferies is senior manager on Series A, with Morgan Stanley leading Series B.

The junior-lien bonds carry ratings of Aa2 from Moody's Investors Service, AA-minus from Standard & Poor's and AA-plus from Fitch Ratings. Outlooks are stable.

The city expects savings through refunding its Series 2003 junior-lien variable-rate bonds.

As of Oct. 31, the electric and gas utility had $1.5 billion in parity junior-lien system revenue bonds, and about $3.9 billion in senior-lien bonds outstanding.

On the day of the CPS pricing, the San Antonio City Council is scheduled to approve up to $348 million of new money and refunding for the San Antonio Water System.

Another $75.9 million of bonds are expected to be sold to the Texas Water Development Board, the state's triple-A-rated water bond bank.

SAWS carries ratings of AA-plus from Standard & Poor's and Aa1 from Moody's Investors Service on its senior-lien revenue bonds. San Antonio's general obligation bonds are rated triple-A.

About $268.5 million of the $348.5 million in authorized debt will be used to refund Series 2004 and 2005 bonds that are currently callable.

"In the current low interest rate environment, the Series 2004 Bonds and the Series 2005 Bonds could be refunded with a new series of bonds for debt service savings," city staffers wrote to the council. The bond will be issued as fixed rate debt to lock in current low interest rates, they said.

Both utilities have ambitious capital improvement programs underway.

The CPS Energy program totals $2.9 billion through 2019 to meet proposed new environmental regulations and regulatory standards.

CPS provides electric and also gas service to all of Bexar County and parts of seven adjacent counties, representing a population of about 2.3 million.  The metro area's population has doubled since 1980.

SAWS, meanwhile, is on the receiving end of a $3 billion pipeline project developed by a private consortium. The 142-mile pipeline, one of the largest projects in San Antonio's history, is expected to transport up to 16.3 billion gallons per year from Burleson and Milam counties east of Austin to SAWS.  The project is expected to be completed in 2020.

For reprint and licensing requests for this article, click here.
Texas
MORE FROM BOND BUYER