DALLAS - San Antonio will combine new money and refunding bonds in a $291 million deal expected to price Thursday, Jan. 22.
Wells Fargo Securities is senior manager and book-runner on the bonds, with managing director Frank Farley as lead banker.
Daniel Hartman, managing director of Public Financial Management and Donald Gonzales, managing director of Estrada Hinojosa & Co. are co-financial advisors.
The bonds, issued for the San Antonio Water System, are rated Aa2 by Moody's Investors Service and AA by both Standard & Poor's and Fitch Ratings. Outlooks are stable.
About 76% of the issue will refund previously issued bonds, said SAWS treasurer Phyllis Garcia.
"Based on market conditions of Jan. 8, 2015, SAWS estimates savings of approximately 15% of the refunded bonds or approximately $42 million through 2040," Garcia said. "SAWS anticipates strong market reception for the deal by investors based on the essential service nature of the revenue bonds and SAWS' credit rating."
Following the sale, the system's outstanding debt will total $1.2 billion in senior lien, $1.4 billion in junior lien, and $138.6 million in commercial paper obligations, according to Moody's.
The Series 2015B bonds are secured by a junior lien on the net revenues of the system. The Series 2015B bonds are subordinate to the senior lien, but superior to the subordinate lien, as reflected in the respective ratings.
In the last decade, the population of the state's second-largest city increased by 16% to 1.3 million. The local employment base includes a mix of military, city government and education, tourism, financial, healthcare, oil, manufacturing and tourism industries.
A boom over the past five years created by the production of oil and gas in Eagle Ford Shale area of south Texas has fueled strong economic growth. However, the rapid drop in oil prices has raised concerns about how the economy will be affected.
"Due to significant capital needs, and a growing population, we expect that SAWS's debt ratio will increase over the medium to long term," Moody's analyst Adebola Kushimo noted. "The system's service area is large and could experience growth of up to 200,000 people with recently announced annexation plans."
