Nikolai J. Sklaroff
October 27, 2026
Results of Recent Capital
Finance Transactions
August Closings
2 BONDS
1 2026 Revenue Bonds
Water Enterprise
$399.685M
Aug. 13 | CLOSED
2 Revenue Bonds 2026A
Wastewater Enterprise
$401.445M
Aug. 13 | CLOSED
CREDIT FACILITIES
3 Replacement
Liquidity
Facility
Wastewater Enterprise
$125M
RBC Bank
(Series A-6)
4 New Credit
Facility
Wastewater Enterprise
$125M
TD Bank, N.A.
(Series A-9)
5 Standby Letter of Credit (financial
security needed for California
Department of Fish and Wildfire
permits)
Water Enterprise
2 Revenue Bonds 2026B
(Refunding)
Wastewater Enterprise
$285.425M
Aug. 13 | CLOSED
$52.9M in total
11 Standby LOCs with Bank of America
Taxable and Tax-Exempt Yields
3 0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00% 30Y MMD 30Y UST
10-Year Average 30Y MMD 10-Year Average 30Y UST
5.50%
5.05%
3.81%
3.74%
3.25%
2.98%
Source: LSEG Municipal Market Monitor, J.P. Morgan as of 8/6/2026 Aug-6 30-Year Avg.
30-Year MMD 4.48% 3.95%
30-Year UST 5.21% 4.16%
30-Year MMD/UST 85.96% 96.11%
Wastewater Bond Transaction
4 Four-Day Pricing and a One-Week Close
AUG 3
Series A
IOI
AUG 4
Series A
final
AUG 5
Series B
retail
AUG 6
Series B
final
AUG 13
Closing
Subscription
Series A — Indication
of Interest (IOI)
2.6×
$1.04B orders for $401 million available bonds
Series A — final 1.9×
Spread tightened 8 bps
Series B — retail 3.7×
$1.047B orders for $282 million available bonds
Series B — final 5.8×
$1.650B orders for $282 million available bonds
Actual Cost vs. Financial Plan
5 All-in True Interest Cost
0%
2%
4%
6%
6.00%
Financial
Plan
4.93%
Series A
3.23%
Series B
THE
TAKEAWAY
Series A
1.07% lower
Series B
2.77% lower
Both priced below
the 6% plan.
Build America Bonds
(Subsidy Risk and Response)
6 2009-10 BAB program Taxable bonds issued with a federal subsidy equal to 35% of interest.
2013 Sequestration begins
Across-the-board reductions lower
subsidy payments below the promised
level.
Today Effective subsidy:
33.005%
A 5.7% reduction to the 35% subsidy
remains in effect.
2023 Legal path clarified
Federal appellate decision upheld
subsidy reductions; Supreme Court
declined review.
2026 SFPUC response
Extraordinary redemption removes
future subsidy exposure on 2010B
BABs.
Lost subsidies have cost the SFPUC more than $25 million to date across its three enterprises.
Wastewater Enterprise
(Revenue Bonds 2026A - Taxable)
7 TOTAL PAR
$401.4M
Senior Manager
Morgan Stanley
Maturity/Coupon
10/10/2031
4.656%
All-in TIC
4.93%
Summary
• Issued to provide additional funding for the Biosolids Digesters Facilities Project.
• Issued as taxable bonds to:
o provide time to maximize potential Investment Tax Credits through the Inflation Reduction Act.
o conduct a final tax review of off-take arrangements for planned resource recovery of biogas, solids, and treated water, before deciding on the optimal issuance of long-term tax-exempt financing.
Wastewater Enterprise
(Revenue Bonds 2026B)
8 TOTAL PAR
$285.4M
Cashflow Savings
$33.1M
Senior Manager
JP Morgan
All-in TIC
3.23%
Summary
• Refund outstanding 2010B Build America Bonds to mitigate federal subsidy exposure and achieve cash flow savings. • Current refund 2016AB for interest rate savings.
• Savings Detail:
o $33 million over the next 15 years.
o $4 million savings in the current fiscal year.
o $1.6 million the following year and approximately $2.1 million per year thereafter through Fiscal Year 2040-41.
• The SFPUC has now eliminated 66% of the BABs subsidy bonds across three enterprises that it had when the Commission first approved BABs reduction strategy in 2025.
Final 2026 Wastewater Bond
(Pricing Results)
9 Metric Series A Series B Combined
Par amount $401.445M $285.425M $686.870M
Bond proceeds $401.445M $322.331M $723.776M
Premium — $36.906M $36.906M
Yield / range 4.656% 2.28%–3.61% —
All-in TIC 4.925% 3.233% 4.528%
Maturity / Tender Tender 2031;
final 2060
Final 2040 Final 2060
Water Enterprise
(2026 Direct Placement)
10 TOTAL PAR
$399.7M
Purchaser
Wells Fargo
Maturity/Coupon
11/1/2031
3.510%
ALL-IN TIC
3.62%
Summary
• The direct purchase by affiliate of Wells Fargo Bank created capacity for Controller's Reserve Release so contracts and capital spending can advance in FY 2026-27.
• Avoided investor marketing, investor disclosure document, and a rating for the 2026 bonds through the direct purchase transaction. • Offered with a nominal maturity just over five years, with a one- year mandatory tender. The Direct Purchase is expected to be retired by Water Revenue Bonds planned for FY 2027-28.
• 10-Year Plan calls for the issuance of more than $1 billion new money bonds in early FY 2028.
Ratings Outcomes
11 0101 Wastewater Enterprise
Moody’s Investors Services affirmed their Aa2 rating and Stable Outlook.
S&P Global Ratings affirmed their AA ratings and restored a Stable Outlook from a previous Negative Outlook it had
assigned to the Wastewater Bonds in 2024.
02 Power Enterprise
S&P is conducting their annual surveillance and SFPUC
staff is working on providing responses.
Fitch Ratings conducted their surveillance review and
concluded that there should be no change to the existing ratings and outlook. (AA-, Stable Outlook)
Other Ratings News
12 0103 Water Enterprise
S&P Global Ratings recently downgraded San Diego
County Water Authority by two notches (large downgrade) based on member quality.
S&P contacted SFPUC to indicate they were reassessing
whether to apply Retail or Wholesale Criteria to SFPUC.
SFPUC successfully argued that no criteria change was
warranted. S&P determined not to proceed with review.
• Note the rating agencies regularly update the ratings for all four rated SFPUC entities, including CleanPowerSF,
including annual surveillance reviews and in conjunction with certain bank facility renewals/replacements.
• Good News: ALL SFPUC Ratings carry Stable Outlooks
Capital Financing Plans in Year Ahead
(Dates/Amounts Subject to Change)
13 0101
Wastewater Enterprise
• October 2026: $100 million JPMorgan Chase Bank,
N.A. facility to replace Sumitomo Mitsui Letter of Credit expiring May 31, 2027. (Sumitomo withdrawing from
municipal credit market)
• Approximately April 2027: Successfully deferred from FY 2026 to FY 2027 and now tentatively planned as (i)
~ $900-$1.3 billion of tax-exempt bonds and a separate
$200-400 million of taxable bonds for the BDFP. Both
teams already in place.
• September 2027-January 2028 – dependent on market
conditions, current refunding of 2024A Taxable Notes
and Series 2018A and 2018B bonds for savings
(approximately $788 million). Team already in place.
02 14
01 02 Water Enterprise
• October 2026: $200 million Wells Fargo Bank, N.A.
liquidity facility to replace Sumitomo Mitsui Letter of Credit expiring June 15, 2027. Sumitomo is
withdrawing from the municipal credit market.
• July – August 2027: Planned issuance of $1.1 billion of new money water bonds, including refinancing of
nearly $400 million interim bonds issued in August
2026.02
Power Enterprise
• By March 2027: Renewal or Replacement of
CleanPowerSF Credit Facility (JPMorgan Facility)
• No Power Revenue Bonds planned (until $612 million
in FY 2029 in 10 Year Plan).
03 More Plans in Year Ahead
(Dates/Amounts Subject to Change)
15 Questions
Thanks to SFPUC's Capital Finance Analyst Team
Edward Kwong, Capital Finance Analyst,
Dan Fuchs, Capital Finance Analyst,
Eric Kwak, Debt Analyst,
Earl Dunivan, Debt Analyst
Becca Siegler, San Francisco Fellow