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The Metropolitan Water District (CA)



Water Revenue Bonds, 2020 Series A

January 27, 2020


Image by Sam Mgrdichian

The bonds priced at the lowest credit spreads ever for MWD

The Bonds’ proceeds will be used to refinance short-term notes and finance a portion of the costs of acquisition and construction of improvements to Metropolitan’s Water System.

In order to preserve Metropolitan’s near-term debt service coverage, SWS recommended that Metropolitan structure the bonds to amortize between 2030 and 2049. Metropolitan followed SWS’ recommendation to accelerate its pricing prior to the January 28th and 29th FOMC meetings.

The positive market tone allowed SWS’s underwriting desk to enter the market with an aggressive pricing scale and the transaction received significant interest from investors. Over $1 billion of orders were placed for the bonds. Additionally, the bonds were 4.9x oversubscribed by 38 different investors including 25 new investors who were not previously reported as holders of Metropolitan’s bonds.

The bonds priced at the lowest credit spreads ever for MWD, between -27 to -11 basis points compared to the AAA MMD yield curve. Of the thirteen bond maturities offered, eleven of them priced at the lowest spreads in California since 2002. The True Interest Cost of the bonds was 3.05% and the bonds have an average life of 21.7 years.

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