The City of Houston has successfully completed the sale of $1.7 billion of fixed- rate water and sewer system debt. This is the first part of a huge $3.1 billion water and sewer debt restructuring that has been in the works for over a year.

“With the help of financial advisors at Coastal Securities and an underwriting team led by Bear, Stearns and Company, Goldman Sachs and Company and UBS Financial Services Incorporated, the City was able to take advantage of favorable movement in interest rates. The end result is $80 million in present value savings,” said Annise D. Parker, Houston City Controller.

This is the largest and most complicated refinancing ever executed by the City of Houston. It is part of a broader plan to rid the City’s water and sewer department of outmoded bond covenants and create a combined utility system. The new combined system will allow for up to $50 million a year for debt financed storm water drainage improvements. This marks the first time in the City’s history that there will be a dedicated source of dollars for needed drainage projects.

The City will go to market with the remaining $1.4 billion of debt on June 8th.

The bonds have been assigned an A2 rating by Moody’s Investment Services and A+ ratings from both Standard and Poor’s Investment Services and Fitch Ratings.