1 Nikolai J. Sklaroff,
Capital Finance Director
May 13, 2025
Results of Recent Financings for
Water Enterprise
Recent Water Bond Sale
(Series 2025ABC)
• March 11th - Commission authorized
refinancing of up to $1,889,190,000
of outstanding water revenue bonds.
• Bonds priced on April 1st and 2nd.
• Staff updates the results of the bond
sale to the Commission and in a
Board of Supervisors memo.
• Executed entirely for refinancing
savings, leveraging bond offering
documents prepared for new money
bonds to be sold in June.
• The Bonds lowered future
ratepayer costs by $56.2 million.
2 Water Ratings Confirmed
(Despite Adverse Sector Credit Trends)
3 In February 2025, The SFPUC received Commission
approval for the updated 10-year Financial Plan for
FY2025-26 to FY2034-35 and the SFPUC presented to
the ratings agencies, Moody’s Investors Service and
S&P Global Ratings, for the 2025ABC water bonds.
December 2024
S&P Global Ratings
lowered its long-term
rating to “AA+” from
“AAA” on the City and
County of San
Francisco.
February 2025
S&P Global Ratings
later published its report
“U.S. Municipal Water &
Sewer Utilities Rating
Action, Fourth-Quarter
2024,” which noted
negative ratings actions
by S&P exceeding
positive actions almost
six-to-one.
February 2025
S&P Global Ratings
published a report
which noted increased
credit risks associated
with wildfires for
California public finance
entities.
March 2025
The SFPUC’s Water
Enterprise received
confirmation of its high
bond ratings of “Aa2”
from Moody’s
Investors Service and
“AA-” from S&P
Global Ratings with
Stable outlooks.
October 2024
S&P Global Ratings
published a report
titled “California
Utilities Enter Period
of Significant
Spending That May
Strain Water and
Sewer Rate
Affordability.”
July 2024
S&P Global Ratings
revised its outlook for
the SFPUC
Wastewater Enterprise
to negative from stable
and affirmed its
"AA" rating.
Water Revenue Bond Sales
(Series 2025ABC)
4 2025
Series A
2025
Series B
2025
Series C
Total
Par $467,960,000 $37,400,000 $18,075,000 $523,435,000
Purpose Refinancing
(WSIP Bonds)
Refinancing
(Regional &
Local Bonds)
Refinancing
(Hetch Hetchy
Water Bonds)
Refinancing of
Water Bonds
Average
Life
7.4 Years 7.3 Years 8.8 Years 7.5 Years
Final
Maturity
11/1/2047 11/1/2047 11/1/2047 11/1/2047
Pricing April 1-2, 2025
Sale Jefferies LLC as Senior Manager, Wells Fargo Securities a Co- Senior Manager and Barclays, RBC Capital Markets, Siebert Williams Shank & Co, and T.D. Securities as Co-Managers 2025ABC Bond Sale Conditions
(AAA Rated Bonds Over Past 30 Years)
5 • Broader financial markets awaited clarity on economic, fiscal, trade and political developments.
• High grade tax-exempt municipal bond yields were above the middle of their 30-year ranges.
Source: Montague De Rose & Associates; Municipal Market Data Index data.
2025ABC Bond Sale Results
(Strong demand generated lower rates)
6 Total subscription for the combined Series A, B, and C was about 1.9x the available bonds with $1.007 billion of total orders for $523.4 million of bonds.
Due to lack of investor demand for the bonds maturing in the very short 2025 maturity and due to the 4% coupon required in the 2029 maturity for structuring purposes, Jefferies underwrote unsold balances in those maturities.
Due to lower tax-exempt rates and strong investor demand, rates were lowered by
0.02% to as much as 0.14% along the interest rate curve during the pricing process.
Institutional Order Period
Additional $444 million of orders Unsold balances reduced to about $62 million Retail Order Period
Generated about $599 million of orders $109 million of unsold balances 2025ABC Final Pricing Results
7 Series A
(WSIP) (Green
Bonds)
Series B
(Regional Water and
Local Water)
Series C
(Hetch Hetchy Water)
Final Maturity November 1, 2047 November 1, 2047 November 1, 2047 All-in True Interest
Cost 3.25% 3.52% 3.70%
Purpose $467.96M to refinance
certain outstanding WSIP
bonds through a tender
refunding and current
refunding to achieve debt
service savings
$37.4M to refinance certain
outstanding Regional Water
and Local Water bonds
through a tender refunding
and current refunding to
achieve debt service savings
$18.075M to refinance certain
outstanding Hetch Hetchy
Water bonds through a tender
refunding and current refunding
to achieve debt service savings
2025 Series ABC
Water Revenue Bonds
Par Amount $523,435,000
Premium $59,339,977
Total Proceeds $582,774,977
All-in True Interest Cost 3.28%
Closing Date April 17, 2025
Independent Pricing Consultant
(2025 Series ABC Report)
8 In addition to our two Municipal Advisory
firms, we engaged an Independent Pricing
Consultant (PFM Financial Advisors LLC) to
evaluate the results of the sale as required by
policy.
• “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 and 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 2025ABC Bonds were
reasonable and fairly priced in light of the
market conditions on April 2, 2025.”
Series 2025ABC Tender Offering
9 UST : Rate Movement Since 4/1/2022 MMD AAA: Rate Movement Since 4/1/2022 Inverse relationship between interest rates and bond
prices
●
%
$
When interest rates rise,
bond prices fall
●
%
$
When interest rates fall,
bond prices rise
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
Jun-23
Aug-23
Oct-23
Dec-23
Feb-24
Apr-24
Jun-24
Aug-24
Oct-24
Dec-24
Feb-25
Apr-25
10-Yr UST 30-Yr UST
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
Jun-23
Aug-23
Oct-23
Dec-23
Feb-24
Apr-24
Jun-24
Aug-24
Oct-24
Dec-24
Feb-25
Apr-25
10-Yr MMD 30-Yr MMD
Tender Process
10 Bond Proceeds
Payment for
Tendered
Bonds
New T/E Refunding Bonds
Participating
Bondholders of
Tendered Bonds
SFPUC New Bondholders
Tendered Bonds
TENDER OFFER
• Investors may be interested in selling their existing SFPUC bonds • Investors may need liquidity or simply want to exit bond positions • Rising rates, negatively affect price of outstanding bonds • SFPUC can offer investors the opportunity to tender back bonds for a price that is better than what they can be sold for in the open market • Win-Win opportunity for investors and SFPUC
Initiating Tender Sequence
• Issued Notice of Potential Issuance February 21, 2025 • “Invitation to Tender Bonds” and POS March 17, 2025
11 Sequence of Tender Notices
(https://emma.msrb.org)
12 Tender Pricing for Each Bonds
(Results Based on Investor Preferences)
13 Results: Taxable Bonds
14 $692.8M
$134.8M
Not offered from Investors
Offered from Investors
$827.6M
Overview
• Produced 6.48%
present value
savings of $8.7M.
• Created additional
optionality in debt
portfolio by
replacing taxable
bonds with 10-year
par call tax-
exempt bonds that
have the potential
to generate
additional refunding
savings in about
10-years.
$133.7M
tendered
$133.7M
$1.1M
Accepted by SFPUC
Not accepted by SFPUC
Taxable Bonds
Candidates
Tender Offers
Accepted by SFPUC
Results: Tax-Exempt Bonds
15 $274.1M 238.1
$238.1M
Not offered from Investors
Offered from Investors
$512.2M
Overview
• Produced 6.78%
Present Value
savings of
$10.3M.
$152.4M
tendered
$152.4M
$85.7M
Accepted by SFPUC
Not Accepted by SFPUC
Tax-Exempt Bonds
Candidates Tender Offers
Accepted by SFPUC
Summary of Tender Results
16 Total Target
Bonds
Par
Tendered
Tender
Participation
Par
Accepted
PV
Savings
% PV
Savings
Taxable
Tenders 827,590,000 134,815,000 16.3% 133,665,000 8,655,286 6.48% Tax-
Exempt
Tenders
515,220,000 238,070,000 46.2% 152,365,000 10,334,028 6.78% All
Tenders 1,342,810,000 372,885,000 27.8% 286,030,000 18,989,314 6.64% Source: Montague, DeRose & Associates, Municipal Advisors to the SFPUC Summary of Current Refunding
(Consisting of Bonds the SFPUC “Called”)
17 Bond Par
Amount
Par Amount of
Refunded Bonds
PV
Savings
% Savings of
Refunded
Bonds
Series 2025A-
Current
Refund 2015A
$222,155,000 $244,650,000 $18,589,210 7.6%
Series 2025A-
Current
Refund 2017A
18,245,000 19,660,000 1,480,430 7.5%
Series 2025B-
Current
Refund 2017B
22,250,000 23,975,000 1,805,589 7.5%
Series 2025C-
Current
Refund 2017C
10,645,000 11,470,000 863,806 7.5%
All Current
Refunding $273,295,000 $299,755,000 $22,739,035 7.6%
Key Results
(Series 2025ABC Water Revenue Bonds)
18Source: Montague, DeRose & Associates, Municipal Advisors to the SFPUC Sub-Series A Sub-Series B Sub-Series C Combined
Par 467,960,000 37,400,000 18,075,000 523,435,000
Final Maturity 11/1/2047 11/1/2047 11/1/2047 11/1/2047
First Call Date 5/1/2035 5/1/2035 5/1/2035 5/1/2035
Average Life (Yrs) 7.4 7.3 8.8 7.5
Arbitrage Yield 3.06% 3.06% 3.06% 3.06%
All-in TIC 3.25% 3.52% 3.70% 3.28%
PV Savings ($) 38,253,220 2,750,277 1,396,875 42,400,372 PV Savings (%) 7.25% 6.34% 6.56% 7.16%
Outstanding Water Debt
($million)
19 Before
2025ABC
After
2025ABC
Revenue Bonds $4,496 $4,427
Commercial Paper
• Authorized
• Drawn
$750
$311
$750
$311
Net result: Reduced future Water Enterprise repayments costs over the next 22 years by approximately $56.2 million gross savings. The present value of the savings is $42.4 million or
7.2% of refunded bond par amount.
Projected Aggregate Net Debt Service
20 FY2025-26 to FY2034-35 Financial Plan Projected Debt Issuance FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Total - $1,083 - - $1,045 - - $771 - - $2,899
-
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
Westside SRF Mnt Tunnel SRF Outstanding Revenue Bond NDS Series 2025AB&C Refunding Previous Revenue Bond NDS & SRFs Record Green Bond Issuance
21 Water Wastewater Power Total
$2.835B $2.924B $106.3M $5.865B
SFPUC Green Bond Issuance by Enterprise
SFPUC Green Bond Issuance by Calendar Year*
*This chart represents only bonds issued. In addition, there are various other financing tools the SFPUC utilizes including loans and credit facilities that we obtain and maintain. $0
$500
$1,000
$1,500
$2,000
$2,500
2001 2002 2003 2006 2009 2010 2011 2012 2013 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ($ millions)
Water (Green) Water (Non-Green) Wastewater (Green)
Wastewater (Non-Green) Power (Green) Power (Non-Green)
22 Questions