Risk-averse investors will get a shot at triple-A rated general obligation bonds from Texas on Wednesday as the Texas Water Development Board brings $220 million to market.
The refunding deal is designed for savings, said TWDB Chairman Peter Lake.
“We’re hoping for savings of $15 million to $18 million,” said Lake, whose agency was created to lower the cost of debt for local and regional utilities. The utilities — some highly rated — place their bonds with the TWDB, which then issues bonds covering the pooled debt.
The bonds come in four series (C,D,E and F) and include variable and fixed-rate interest paper.
John Young, director for book-runner Wells Fargo Securities, is co-lead banker with managing director Desrye Morgan.
“We expect a pretty good transaction,” Young said.
Anne Burger Entrekin, managing director for Hilltop Securities, is the municipal advisor on the deal.
The size of this deal is more representative of those the board has historically offered. Last fall, the board priced a record $1.6 billion for a program authorized by lawmakers in 2013 and approved by voters under a constitutional amendment the same year.
The state program known as SWIFT for State Water Implementation Fund for Texas was created after a period of severe drought in the rapidly growing state.
Proceeds of bond sales flow to a fund called SWIRFT for State Water Implementation Revenue Fund for Texas. From there, the funds go toward local and regional borrowers that have qualified for the program and placed their own bonds with the TWDB.
Through the first five years of the SWIRFT program, the agency has committed roughly $8.2 billion for state water plan projects. The projects include reservoirs, pipelines, conservation and other measures to protect the state from the effects of drought. The TWDB was created in 1957 during the worst Texas drought in modern history and has helped spare the state from a repeat of the crisis.
Lake said the board expects another SWIRFT transaction in the fall but does not know how large it will be.
