The Public Utilities Commission of the City and County of San Francisco, California, (SFPUC) issued $1.14 billion in bonds to finance sustainable capital projects for its wastewater system.
The commission sold $624.6 million in tax-exempt bonds and $518.4 million in federally taxable bonds. The tax-exempt bonds mature between 2027 and 2054, yielding between 2.69% and 3.77%. The taxable bonds mature between 2027 and 2037 and pay interest at rates between 4.581% and 5.086%. The securities received a rating of Aa2 from Moody’s Investors Service and AA from S&P Global Ratings, which assigned a negative outlook.
“The negative outlook reflects the significant size and scope of SFPUC’s upcoming debt plans and management’s 10-year financial forecast that projects all-in debt service coverage declining to very thin levels compared to those of its peers at the ‘AA’ rating,” S&P analyst Chloe Weil said in a press release.
SFPUC will use the bond proceeds to pilot green infrastructure projects and fund other initiatives. The commission will also use the issuance proceeds to refund outstanding commercial paper notes.
The bonds are limited obligations of SFPUC, payable by net revenue from San Francisco’s wastewater enterprise.
BofA Securities, Inc and Morgan Stanley & Co LLC served as lead underwriters on the issuance. Montague DeRose & Associates, LLC and Backstrom McCarley Berry & Co, LLC acted as municipal advisors.