Strong Water Authority Credit Saves $67.4 Million for Ratepayers
Strong credit ratings for the San Diego County Water Authority will save water ratepayers across the region $67.4 million on bond sales executed Wednesday in New York -- $27 million more than staff forecasted in May. All three major rating agencies - S&P, Moody's and Fitch - recently affirmed the Water Authority's positive ratings and stable outlook, creating the opportunity for ratepayers to benefit from lower financing costs for critical water infrastructure.
The savings resulted from the Water Authority's refinancing of $283.5 million in Series 2020A Bonds (Green Bonds) and $117.7 million in Series 2021A (Green Bonds) senior-lien water revenue refunding bonds. Technical factors in the market provided favorable conditions - including more demand for bonds than supply - that the Water Authority team moved quickly to capture.
The Water Authority bonds were priced July 8 - a week ahead of schedule - and the strong credit ratings, strong bond policies, and swift action by the Board of Directors in June, helped lower the interest rates compared to what the Water Authority would have had to pay with downgraded credit. Since 2010, the Water Authority has saved a total of $235 million through 10 bond refundings, including the latest transactions.
"Thanks to strategic, courageous action by the Water Authority Board of Directors in June to set rates for 2021, the agency has secured the most significant savings from bond refundings in the past decade," said Water Authority Board Chair Jim Madaffer. "The Water Authority maintains a strong financial position even in these difficult times, and that ultimately benefits everyone who calls San Diego County home."
In affirming their credit ratings over the past few weeks, the three rating services cited the Water Authority's strong financial leadership, including prudent strategies to manage issues related to COVID-19, its success diversifying water supply sources, its commitment to infrastructure maintenance, and its financial reserves for managing contingencies, among other factors.
"In the midst of a global pandemic and a challenging economy, the Water Authority continues proactively managing its finances and lowering the cost of debt," said Lisa Marie Harris, finance director for the Water Authority. "We have strong debt coverage, healthy reserves and an experienced management team to sustain our fiscal health."
For more information about the Water Authority's finances go to www.sdcwa.org/finance-investor-relations.
The San Diego County Water Authority sustains a $245 billion regional economy and the quality of life for 3.3 million residents through a multi-decade water supply diversification plan, major infrastructure investments and forward-thinking policies that promote fiscal and environmental responsibility. A public agency created in 1944, the Water Authority delivers wholesale water supplies to 24 retail water providers, including cities, special districts and a military base.
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