DC Water Issues $277 Million in Bonds in New Financing, Securing Lowest Interest Rate Ever
DC Water issued 2012 bonds last week in a highly successful deal at record low interest rates. DC Waters capital improvement projects leverage debt financing for funding. Paying lower interest rates lowers the overall costs of the project and annual operations expenses for debt payments.
This bond issuance is a smashing success, commented DC Water Chairman of the Board William M. Walker. By issuing new debt at historically low rates, and refinancing existing higher interest rate debt, DC Water saved over $25 million over the life of the bonds. The low interest rate on the new financing means the overall cost of new construction projects will be lower than projected. That is even more important now that we are building the most expensive environmental construction projects in DC Waters history.
While initial plans called for a two-day sale period, DC Water bonds were greatly sought after by both retail and institutional investors. As a result of a significant amount of retail demand, the sale was accelerated to accommodate both retail and institutional investors in a single day.
This successful issuance is testimony to the markets perception of DC Waters strength, added Chief Financial Officer Olu Adebo. It comes on the heels of a bond rating upgrade from Standard and Poors and reaffirmation from Moodys and Fitch. Combined, these events again demonstrate confidence in DC Waters financial performance, management strength and strategic planning.
This issuance of debt enables us to move forward with replacing our water mains and building projects that protect the environment, said DC Water General Manager George S. Hawkins, All of this construction will add to the regions economic vitality and provide jobs to local construction workers and laborers.
DC Water issued its Series 2012A and 2012B Public Utility Subordinate Multimodal Lien Revenue Bonds for a face value of $277 million (and brought in $300 million in proceeds). The 2012A bonds were issued as fixed rate debt at 3.6 percent True Interest Cost (TIC) with an average term of 15 years. The 2012 Series B were issued as SIFMA Index Variable Rate Bonds with initial tender dates of 2015 and 2016. The 2012 Series C were fixed rate refunding of 2003 bonds, at 3.7 percent for a term of 17 years.
In 2010, the Authority also had tremendous success going to the bond market, with all $300 million in bonds sold to retail and institutional investors in one day.
