BRADENTON, Fla. - Investors snapped up Atlanta’s water and wastewater refunding bonds, oversubscribing the deal by 2.8 times, according to city officials.
The City Council approved the pricing on $226.2 million of bonds Wednesday, saying that the offering had received $634.7 million in orders the day before.
The deal sold at a true interest cost of 3.489%, and will save $1.86 million in annual debt service.
Bond proceeds will advance refund 2009B bonds, which were issued to finance capital projects in the city’s Department of Watershed Management.
The 25-year refunding generated $27.5 million or 11.43% in net present value savings within existing maturities, Atlanta’s Chief Financial Officer Jim Beard said.
“The transaction was successful based on the level of initial interest by buyers in the market and the orders received during the order period with some maturities being heavily oversubscribed,” Beard said Thursday. “The city was able to work with the underwriter to tighten spreads for certain maturities.”
Siebert Cisneros Shank & Co. was the book-runner for the syndicate, which included co-managers Barclays Capital, Ramirez & Co., Academy Securities, and SunTrust Robinson Humphrey.
The preliminary pricing book developed for the order period anticipated a “decent” level of present-value savings based on an analysis of the market prior to pricing, he said.
The bonds priced to yield 1.27% with a 5% coupon in 2020, to 2.56% with a 5% coupon in 2028, to 3.61% with a 3% coupon in 2039, the final maturity.
Spreads to the benchmark for those maturities are 16, 33, and 69 basis points.
“Our final levels were slightly better than initially anticipated despite a bit of choppiness in the municipal market,” Beard said.
The bonds are rated A-plus by Fitch Ratings, Aa2 by Moody's Investors Service, and AA-minus by S&P Global Ratings.
Prior to pricing, Moody’s upgraded its rating one notch to Aa2 from Aa3, saying that it reflected the watershed system’s stable financial position as well as sound coverage and ample liquidity – all sustained amid a “significant” capital investment program.
FirstSouthwest was the financial advisor for the deal.
Hunton & Williams was bond counsel. Greenberg Traurig LLP and Riddle and Schwartz LLC were co-bond counsel. The Haley Law Firm LLC was counsel to the underwriters.