$955M Bond Deal Continues Houston’s Pattern of Saving Money
Integrity of Utilities and Area Economy Make Case for Investment
February 11, 2016 -- Houston City Controller Chris Brown announced that a Feb. 9 bond sale of $955 million by the City’s Combined Utility System to re-finance previously issued bonds and commercial paper will generate approximately $116 million Net Present Value savings for the System. The sale encompassed $60 million in new money for projects. The issuance included $185 million commercial paper and $801.5 million of refunded bonds.
"This was a large sale, and the market was very favorable, so that also allowed us to add the $60 million new money component,” says Controller Brown. “Our active investor outreach appears to have paid off handsomely. At this time of City budget challenges, it is very rewarding to realize this kind of savings over the term of this debt. Importantly, Fitch Ratings maintains its AA rating and stable outlook for the City’s utility system.”
Houston’s utility system is recognized for its comprehensive capital improvement plan 2015-2019, its automatic rate increases, and the ability of management to address unanticipated expenditures. The current $2 billion capital improvement plan addresses an aging infrastructure, Houston’s growth and mandated health and safety standards.
“The integrity of Houston’s utility system and the metro area’s strong growth certainly make the case for investment,” says Brown. “Houston’s CUS is one of the largest in the country, serving Houston and the surrounding counties. The savings generated from this refunding will continue to ensure the System’s ability to carry out its mission to provide clean and safe water to our citizens.”
Members of the syndicate included Wells Fargo, Bookrunner; Morgan Stanley, Co- Senior; RBC Capital Markets, Co- Senior; Hutchinson, Shockey, Erley & Co., Co-Manager; Raymond James, Co-Manager; and The Williams Capital Group, Co-Manager.