CALPERS UAL RESTRUCTURING PROJECT
UPDATE ON 2022 PENSION OBLIGATION BOND AND NEXT STEPS
APRIL 26, 2022
City of Rialto UAL Restructuring Update
Discussion Topics
2 Court Validation Update
POB Market Update
Updated POB Savings Analysis
Next Steps
City of Rialto UAL Restructuring
Court Validation Update
3 July 27, 2021 –C i t y Council approved bond documents and initiation of validation process
Early August 2021 –C o u r t validation process formally initiated November 4, 2021 –C o u r t issued its Order authorizing the City to proceed with the public notice for the validation
March 30, 2022 –C l e r k entered Request for Entry of Default April 2022 – Judge ruling confirmed by telephone, but not yet entered on the docket
May 2022 – Validation complete (final appeal period ends) 10 Month validation process given delays in San Bernardino County Court System
Market Update
4 Range of Historical U.S. Treasury Rates
5‐Year Historical UST Range
Since January 1, 2022, 10‐year and 30‐year
U.S. Treasury yields have increased 112 basis
points and 83 basis points, respectively
Anticipated Fed rate hikes, inflationary
pressures and geopolitical concerns
Limited taxable bond and POB supply in the
California market in recent weeks
Investor demand is expected to increase in
the Summer months due to heavy
redemptions (additional cash to be
reinvested)
Historical U.S. Treasury Rates
4/8/2022 UST
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
1 3 5 7 9 1 11 31 51 71 92 12 32 52 72 9
Recent UAL Restructurings (Public Offerings)
Rapid Increase in Credit Spreads in Addition to Treasury Rates
4.03%
3.69% 3.72%
3.44%
3.25%
2.84%
2.64%
2.54%
2.75% 2.92%
2.74%
2.97%
2.63% 2.56%
2.89%
2.82%
2.64%
2.84% 2.91%
3.15%
3.06%
2.92%
3.07%
2.90%
3.04%
3.35%
4.84%
0 50
100
150
200
250
300
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
Montebello
Riverside (City)
West Covina
Torrance
Gardena
El Cajon
Monterey Park
Chula Vista
Orange
Hungtington Beach
Manhattan Beach
Corte Madera
CMPA
El Segundo
Auburn
Redondo Beach
Covina
San Fernando
Sanger
Stanislaus CFPD
Lakeport
Montclair
National City
Poway
La Habra
Lakeside FPD
Barstow
May
2020
June
2020
July
2020
Oct.
2020
Nov.
2020
Jan.
2021
Feb.
2021
Feb.
2021
Mar.
2021
Mar.
2021
Apr.
2021
Apr.
2021
May
2021
May
2021
May
2021
July
2021
July
2021
Aug.
2021
Aug.
2021
Sep.
2021
Oct.
2021
Oct.
2021
Nov.
2021
Dec.
2021
Jan.
2022
Jan.
2022
Apr.
2022
$150M $430M $200M $350M $101M $147M $106M $350M $286M $364M $91M $19M $27M $144M $17M $226M $63M $32M $19M $12M $8M $62M $84M $44M $72M $28M $20M A+
(AA
Ins.)
AA A+ AA AA ‐ AA AA AA
(AA
Ins.)
AA
(AA
Ins.)
AA+ AAA AAA AAA AA+ AA+ AA AA AA (A+
Ins.)
A+ AA ‐ AA AA ‐ AA‐ AAA AA+ AA ‐ A+
POB POB Lease Lease POB POB POB POB POB POB POB POB POB POB POB LRB POB POB POB POB POB POB POB POB POB POB POB Spread to 30‐Yr. Treasuries
All‐in TIC
Rialto UAL Restructuring Analysis
Previous Estimates vs. 4.50% NTE vs. Current Market
6 February 2022 Est. Not To Exceed Current Market
Metrics
20‐Year
(3.50% AIC)
20‐Year
(4.50% AIC)
20‐Year
(Current Market)
Current UAL $141,783,231 $141,783,231 $141,783,231
Projected UAL After FY 2021 Returns & 6.8% Discount Rate $102,771,438 $102,771,438 $102,771,438 Projected UAL Assuming 2.0% FY 2022 Returns $122,020,000 $122,020,000 $122,020,000 UAL Funded (~82% of Projected UAL Assuming 2.0% FY 2022 Returns) $100,000,000 $100,000,000 $100,000,000 Maturity 20 Years 20 Years 20 Years
Average Life 11.8 Years 12.1 Years 12.2 Years
All‐In Interest Rate 3.50% 4.50% 4.96%
Present Value Savings (%) 22.15% 14.41% 11.10%
Present Value Savings ($) $22,148,739 $14,409,302 $11,099,953 Cumulative Savings $15,478,848 $2,284,707 ($4,011,746)
Savings (2023‐2032) $39,144,409 $32,545,169 $29,402,687 Average Savings (2023‐2032) $3,914,441 $3,254,517 $2,940,269 Rialto UAL Restructuring Analysis
Previous Estimates vs. 4.50% NTE vs. Current Market
7 $0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Millions
Prior UAL Payments POB + Unrefunded UAL Payments (3.50% AIC) POB + Unrefunded UAL Payments (4.50% AIC) POB + Unrefunded UAL Payments (Current Market) City of Rialto UAL Restructuring
Next Steps
8 Based on current market conditions, and inability to meet not‐to‐exceed interest rate thresholds, staff and financing team recommend delaying financing
Team will continue to monitor the market and position to City to access market if conditions improve
Financing team will also explore strategy of private
placement with a bank
Some other recent UAL restructurings have pivoted to this sale method given lower interest rates than public bond market Not likely viable given size and term of Rialto’s POB, but will still be evaluated