Services of the San Francisco Public Utilities Commission 1 RESULTS OF RECENT FINANCINGS FOR
WASTEWATER ENTERPRISE
June 13, 2023
Nikolai J. Sklaroff, Capital Finance Director
Services of the San Francisco Public Utilities Commission 2 • On April 5th, the Wastewater
Enterprise sold $974,380,000
Wastewater Revenue Bonds Series
2023 ABC
o Approved by the Commission on
March 28
th
o $750 million of new project
funds plus refunding bonds
o Offered via negotiated sale with
underwriting syndicates led by
BofA Securities (Series A&B)
and Goldman Sachs (Series C)
o Moody’s Investors Service
affirmed Aa2 wastewater
revenue bond rating and Stable
Outlook
o S&P Global Ratings affirmed AA
wastewater revenue bond rating
and Stable Outlook
Wastewater Revenue Bonds
(2023 Series ABC)
Services of the San Francisco Public Utilities Commission 3 • Volatile interest rate environment but conditions favorable at time of sale o Low competing supply as State and SFPUC dominated the week o Active pre-marketing in partnership with underwriters including press release via Climate Bonds Initiative to highlight green bonds • Strong demand drove rates lower, with all but one maturity over-subscribed • As result, refundings generated Net Present Value (NPV) savings as % of Refunded Bonds of 8.4% (Series B) and 8.8% (Series C), surpassing 3% debt policy floor (NPV savings of $7.65 and $15.78 million respectively) Bond Sale Conditions and Results
Source: Independent Pricing Consultant Report, PFM Financial Advisors LLC Services of the San Francisco Public Utilities Commission Final Pricing Results
(2023 Series ABC)
4 Series A
(SSIP) (Green Bonds)
Series B
(Non-SSIP)
Series C
(SSIP) (Green Bonds)
Final Maturity 19 Years 19 Years 25 Years
True Interest Cost (TIC) 2.88% 3.03% 3.51%
Purpose $632M to fund and
refund commercial paper
issued for SSIP Projects
$325M to fund and
refund commercial paper
and outstanding bonds
for WW Capital
Improvement Projects
$179M to refund
outstanding bonds for
SSIP Projects
2023 Series ABC Wastewater
Revenue Bonds
Par Amount $974,380,000
Premium $161,621,397
Total Proceeds $1,136,001,397
Aggregate True
Interest Cost
3.08%
Sale Date April 5th
Services of the San Francisco Public Utilities Commission Green Bonds Results
• Priority orders for Green Bonds granted to ESG Institutions o Defined as an institutional investor with stated investment targets focused on environmental and social impact.
• Demand for Green Bonds exceeded demand for non-Green Bonds, including from several prominent Green Bond investors.
• Strong demand for bonds contributed to favorable pricing for entire issuance. 5 *Subscriptions calculated based on total Retail and Institutional orders divided by amount allocated within each maturity.
Comparison is between same year maturities with 5% coupons. Source: Ipreo
Services of the San Francisco Public Utilities Commission Independent Pricing Consultant
6 • As customary on SFPUC negotiated bond
sales, in addition to our Municipal Advisors,
we engaged an independent Pricing
Consultant (PFM Financial Advisors LLC) to
evaluate the results of the sale.
• “We have analyzed the sale results in
reference to market information showing
national indices during the time of the sale
and other similar bond sales pricing at
approximately the same time as the Bonds as
well as monitored order flow during the
pricing as well as post-sale data through the
date of this memo.”
• “Based on the data noted in this report, the
orders received by the underwriters during
the marketing and the final pricing levels, we
have concluded that the Bonds were
reasonably and fairly priced in light of the
market conditions on April 5, 2023.”
Services of the San Francisco Public Utilities Commission WIFIA Master Agreement
(Project 1 Loan Agreement)
• Background: WIFIA Master Agreement for an aggregate principal amount up to $791,337,456 and Project 1 Loan Agreement were approved by Commission on April 11, 2023 and both were executed between the SFPUC and U.S. EPA on April 26, 2023.
• The initial draw down amount from the Project 1 Loan agreement under the Master Agreement is $369,335,021 to provide partial funding for certain projects in the Wastewater Capital Plan
• EPA announced it estimates that the loan will save the SFPUC $110 million. 7 Project 1 Loan Agreement Summary
Principal Amount $369,335,021
Interest Rate 3.65%
Final Maturity October 1, 2061
Facilities
constructed and/or
improved
• Westside Pump Station Reliability Improvements
• North Shore Pump Station Wet Weather Improvements
• Wawona Area Stormwater Improvement
• New Treasure Island Wastewater Treatment Plant
• Folsom Area Stormwater Improvement
• Yosemite Creek Daylighting
Services of the San Francisco Public Utilities Commission Resulting Aggregate Net Debt Service
(Projected)
8 * Years are in fiscal year basis.
Services of the San Francisco Public Utilities Commission 9 Questions