Houston City Controller Ronald Green announced that a June 12 bond sale of $547.9 million by the City’s Combined Utility System to re-finance previously issued bonds and commercial paper will generate approximately $34.8 million savings for the System. The sale also encompassed $75 million in new money for projects. The deal makes Houston the top issuer in the state of Texas for the first half of 2014.
“We had not anticipated a sale this large, but the market was very favorable, and that also allowed us to add the $75 million new money component,” says Controller Green. “Our active investor outreach and continued transparency, including our second annual City of Houston Investor Conference in March and our investor relations web page, appear to have paid off handsomely.”
Rated AA by Standard and Poor’s and Aa2 by Moody’s, the bonds attracted significant demand. Houston’s utility system is recognized for its comprehensive capital improvement plan 2014-2018, its automatic rate increases and the ability of management to address unanticipated expenditures. The current $2 billion capital improvement plan addresses an aging infrastructure, Houston’s growth and mandated health and safety standards.
“The integrity of Houston’s utility system and the metro area’s strong growth certainly make the case for investment,” says Green. “We were able to leverage this strong demand and press for lower interest rates to increase the savings on this current transaction. The savings generated from this refunding will continue to ensure the System’s ability to carry out its mission to provide clean and safe water to our citizens.”
Members of the syndicate included senior manager Goldman Sachs, with Citi, Piper Jaffray & Co., Bank of America, Merrill Lynch, FTN Financial Markets and Ramirez & Co. as co-managers.