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Metro Water Dist. of Southern California



Water revenue and refunding bonds, 2024 series A

April 22, 2024


Image by Sam Mgrdichian

This financing represented SWS’ 7th senior managed transaction for Metropolitan, as well as our largest by par for Metropolitan

Proceeds from the 2024 Series A Bonds were used to (1) refund the revolving credit facility notes that partially refinanced the Series 2017B, (2) refund the Series 2020B direct placement, and (3) refund a revolving line of credit.

SWS recommended that Metropolitan stay as flexibility as possible with the pricing strategy due to several market considerations. The supply for the week of pricing was estimated to be over $12 billion, including large highly-rated tax-exempt California bonds from Los Angeles Unified School District ($2.97 billion on April 24th) and Southern California Public Power Authority ($550 million on April 25th).

Volatility in the municipal bond market resulted in varied price views. SWS recommended a retail order period on Monday, April 22ndwith the possibility of accelerating the transaction from its planned Tuesday, April 23rd pricing date if investor interest allowed the transaction to be completed early. Metropolitan, the Municipal Advisor, and SWS agreed that it was best to open the retail order period ahead of pricing discussions for the larger transactions.

At 12:45pm ET on Monday, April 22nd, every maturity had retail orders with 10 maturities fully subscribed. SWS recommended accelerating the pricing on Monday by closing the Retail Order Period at 1:15 pm ET and opening the Institutional Order Period for 1.5 hours. At the end of the Retail Order Period, there were $504 million in total retail orders from 32 professional retail investors with 18 of the 22 maturities fully subscribed for.

At the end of the Institutional Order Period, there were $772 million in total final priority orders from 47 different investors. SWS’ sales desk generated all of the professional retail and institutional orders. Of the investors that submitted orders, 8 of the investors were potentially new investors to Metropolitan’s credit.

For the over subscribed maturities, SWS lowered pricing spreads by 1 to 8 basis points, which brough the All-In TIC to 3.10%.

Metropolitan’s trust in SWS and willingness to be flexible was rewarded with strong investor demand for its bond offering, despite competing Los Angeles-area transactions pricing during the same week at much higher interest rates.

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