Metropolitan saves nearly $25 million with water revenue bond refunding
In a move that will save Southern California ratepayers $25 million over the next 20 years, Metropolitan Water District today refinanced $205 million of higher-cost fixed rate debt.
LOS ANGELES, Calif., Sept. 6, 2001 — In a move that will save Southern California ratepayers $25 million over the next 20 years, Metropolitan Water District today refinanced $205 million of higher-cost fixed rate debt.
"We are constantly monitoring the bond markets to take advantage of favorable conditions to reduce interest costs," said Metropolitan Chief Financial Officer Brian Thomas. "We originally planned to refund the bonds in March, but waited while interest rates continued to decrease. Today's sale allows us to make the most of the money we raise to provide a reliable, high-quality water supply for Southern California."
Metropolitan expects to realize a total savings of $25 million over the life of the bond issue, or nearly $15 million in today's dollars.
The refunded bonds were originally issued in 1992 and 1993 to help finance Metropolitan's long-term capital improvement program, including the construction of MWD's Diamond Valley Lake. Completed in March 2000, the 4,500-acre reservoir nearly doubles the region's water storage capacity and provides a six-month emergency supply.
Today, Metropolitan closed a $224.8 million variable rate water revenue refunding bond transaction, using the proceeds to retire the existing debt obtained at a higher interest rate. Metropolitan then executed interest rate swap agreements with Bear Stearns Financial Products and UBS AG to fix interest rates at 4.2 percent. This transaction marks the second time Metropolitan has used an interest rate swap agreement as part of an advance refunding.
Bear Stearns & Co. Inc. was the underwriter for the 2001 variable rate refunding bonds. Bear Stearns also was appointed to serve as the remarketing agent. O'Melveny & Myers LLP and Curls, Brown & Duran LLP were co-bond counsel for the transaction. Public Resources Advisory Group; Kelling, Northcross & Nobriga; and Estrada Hinojosa & Company served as co-financial advisors to Metropolitan. Dexia Credit Local, acting through its New York Agency, served as the liquidity provider.
The Metropolitan Water District of Southern California is a cooperative of 26 cities and water agencies serving 17 million people in six counties. The district imports water from the Colorado River and Northern California to supplement local supplies, and helps its members to develop increased water conservation, recycling, storage and other water-management programs.
For more information about Metropolitan, visit http://www.mwdH2O.com.