East Bay Municipal Utility District
Water System Revenue Bonds, Series 2014C
Effective marketing attracted local retail as well as new mid-tier institutional buyers
The East Bay Municipal Utility District Water System sold $75 million of new money revenue bonds in June 2014 after a competitive request for proposal process.
Given the significant amount of short-term debt that was restructured into fixed rate mode, Siebert Brandford Shank worked closely with the District’s staff and Financial Advisor to develop a financing structure that not only minimized the District’s need to increase near-term water rates beyond what had already been authorized by the District’s Board, but was marketable to a broad range of investors, including some of the District’s 1,744 employees. Given the long-term average life of the projects, the District was able to back-load the debt to have the principal 100% amortized in the 2041 to 2044 maturity range.
Our sales force sent out a research note to potential investors highlighting the scarcity of 30-year bonds issued by the District, targeting in particular the current holders of the District’s outstanding 30-year bonds and top-tier long-term bond funds which had benefited from positive inflows over the past several months. Despite challenging market conditions—where 30-year “AAA” MMD yields increased by 7 basis points from the start of pre-sale bond marketing through the day of sale and primary market volume ballooned to $8.7 billion (second highest week of supply since the start of the year)—the Bonds generated nearly $200 million of orders (2.66 times available allotments), including $270,000 of orders from local individual retail accounts and over $29 million of orders from mid-tier institutions that were new buyers of the District’s credit.
As a result of our performance, the firm was hired to serve as senior manager on the District’s 2015 Wastewater Refunding.