The Castaic Lake Water Agency successfully completed bond sales of $56.4 million to refund an outstanding bond series, and to supply new funds for important water infrastructure projects which will enhance water supply reliability throughout the Santa Clarita Valley.
Present value savings for the refunding portion are estimated to be $5.9 million (16.6 percent). The refunding will reduce the Agency’s annual debt service costs by an average of $500,000.00. For the new funds, the Agency was able to take advantage of an extremely low interest rate environment in which the bonds were issued at an all-in true interest cost of 3.44 percent.
CLWA Administrative Services Manager Valerie Pryor stated “The Board has a policy to review current debt and take advantage of historically low interest rates to refinance if appropriate to reduce the total cost to our customers.”
The new money generated from the bond sale is earmarked to fund ongoing major Capital Improvement Program (CIP) projects, including expanding the recycled water system, improving groundwater banking projects and treatment plant upgrades. These projects have taken on paramount importance as we continue to address the uncertainty we face with California’s ongoing drought, and are designed to further support the Agency’s mission of delivering reliable, quality water at a reasonable cost to the Santa Clarita Valley.
In March 2016, the Agency received an upgraded rating from Standard & Poor’s from AA to AA+ on the senior obligations and from AA- to AA on the parity obligations. Standard & Poor’s stated, “The raised ratings reflect…the Agency’s robust liquidity position, consistent debt service coverage, and well-delineated financial policies, which address any contingent liabilities.”
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