Los Angeles Department of Water & Power
Power System Revenue Bonds, 2018 Series A
March 28, 2018
Robust premarketing efforts resulted in retail orders exceeding $348 million
Siebert Cisneros Shank served as book-running senior manager in March 2018 for this “Aa2/AA/AA”-rated transaction to current refund the Department’s Power System Revenue Bonds, 2008 Series A.
Extensive pre-marketing efforts resulted in a robust book of retail orders of over $348 million by mid-day on March 27th and given the firm tone in the market, SCS and the Department accelerated the retail order period, closing early and completing the pricing on the same day.
The financing was structured as serial bonds with principal amortizing from 2019 to 2038 to match the maturities of the bonds being refunded and provide level savings LADWP. The Bonds were well received and generated over $1.9 billion of orders in total.
The transaction attracted a very large number of investors including the participation of 69 different buyers. Each maturity was at least one time subscribed for by the end of the institutional order period, which allowed for yield improvements in all maturities. The strong demand allowed spreads to be tightened by up to 6 basis points.
Effective pricing performance by SCS resulted in tighter spreads on the 2034 through 2038 maturities than those on the Department’s Water System 2018A transaction that priced a month earlier. Using MMD as of the sale date for both transactions, the Power System’s 2018A Bonds priced 5 basis points tighter in the 2038 maturity in spread compared to the Water System’s 2018A Bonds, despite the fact that the Department’s Power System bonds historically price wider than its Water System bonds.
The 2018A Bonds achieved the tightest spread to MMD on a 20-year maturity of any Power System bond issue ever sold by the Department.
The refunding achieved approximately $85.8 million of PV savings. The 2018A Bonds had a TIC of 3.36% and Average Life of 14.3 years.