BRADENTON, Fla. – Miami-Dade County will price $958.74 million of water and sewer bonds in a deal that county officials hope will save ratepayers millions in debt service on its advance refunding component.
The two-day pricing will start with retail orders on Wednesday, and finalizes with institutional sales on Thursday.
The deal will be structured with $402.3 million of new water and sewer system revenue bonds with final maturity in 2048. Proceeds will be used to convert commercial paper used to begin various projects into long-term debt.
The county also plans to issue $556.5 million of water and sewer advance refunding bonds, though that part of the deal hinges on getting a minimum of 5% net present value savings, according to Frank Hinson, director of the county Bond Administration Division.
If the minimum is not met, he said the refunding piece could be delayed until next year.
That could be too late if a GOP tax bill becomes law and terminates the ability of issuers to advance refund debt.
“With this advance refunding we expect $68 million in debt service savings that the citizens of Miami-Dade County, the ratepayers, don’t have to pay,” Hinson said. “Come two years when those bonds are callable we may not be in an interest rate environment that says we can refund those bonds.”
Hinson said lobbyists are “talking to the correct people” in Washington making known the county’s opposition to the elimination of advance refundings.
In addition to opposing the elimination of advance refundings, county commissioners passed a resolution opposing other provisions in the tax bills, including the elimination of private activity bonds.
The resolution stressed that the county uses PABs to make capital improvements at Miami International Airport and its seaport, and to finance low-income housing.
Miami-Dade County began preparing for commissioners to approve the upcoming bond issuance before September but Hinson said the process was delayed several weeks because of Hurricane Irma.
When commissioners gave final approval in early November, the advance refunding expected to generate net present value savings of $47 million or 8.65% of refunded par.
Hinson said because of the higher volume of transactions in December, “we expect interest rates to be higher.” The NPV savings could be lower by as much as 1%.
“There is a lot of demand and hopefully we won’t see that big of a drop,” he said.
The county will refund its 2010 water and sewer revenue bonds, which were sold with 8% interest rates. The advance refunding bonds will be issued within existing maturities through 2040.
The bonds are rated A-plus by Fitch Ratings and S&P Global Ratings, and Aa3 by Moody's Investors Service. All have stable outlooks.
The county has a $13.5 billion, 6-year capital plan for various water and sewer projects. Of that amount, Hinson said $1.4 billion has been completed. The county expects to issue $10 billion of debt to support the remainder of the plan, and will use grants and pay-as-you-go funding for the rest.
Public Resources Advisory Group is the county’s financial advisor on the upcoming bond issue.
Wells Fargo Securities LLC is the book-runner.
The syndicate includes Barclays, Blaylock Van LLC, Cabrera Capital Markets LLC, Citi, Drexel Hamilton, Estrada Hinojosa & Co., Jefferies, Loop Capital Markets, Morgan Stanley & Co., Raymond James, RBC Capital Markets, Rice Financial Products Co., Siebert Cisneros Shank & Co.
Squire Patton Boggs LLP and D. Seaton and Associates PA are co-bond counsel.
Nabors, Giblin & Nickerson PA and Liebler, Gonzalez & Portuondo are co-disclosure counsel.
Bryant Miller Olive PA is counsel to the underwriters.