City of Los Angeles
Wastewater System Revenue Bonds
Series 2015-A (Green Bonds) &
Refunding Series 2015-B
Los Angeles Wastewater issues inaugural Green Bonds
Siebert Cisneros Shank served as the book-running senior manager for the City of Los Angeles Wastewater System Revenue Bonds, Series 2015A (Green Bonds) & Refunding Series B which were sold on May 21, 2015. The 2015A Bonds represented the City’s inaugural Green Bond offering, which were issued to finance the construction and improvement of the wastewater collection and treatment system of the City through the sustainable development of Green Projects. The City chose to issue environmentally friendly bonds to attract investors increasingly undertaking in green and socially responsible investing. The 2015B Bonds were issued to current refund certain outstanding bonds.
In conjunction with the City and its financing team, SCS assisted with the rating presentation and took the lead in crafting the investor presentation; the City received ratings of “AA+/AA+/AA+” from S&P, Fitch, and Kroll, respectively.
In the weeks leading up to the pricing, MMD yields had been steadily increasing as the market faced greater supply and global rates rose sharply; in the week prior to the sale, the municipal market absorbed the $8 billion new issue calendar but at historically-wider spreads. The structure consisted of serial maturities in 2027-35 and 2044-45, and the 2015A Bonds were offered at spreads of 25-30 basis points at the time of preliminary pricing and tightened by 2-5 basis points in all but one maturity at re-pricing; similarly, spreads on the 2015B Bonds maturing in 2029-35 were tightened by 2-4 basis points.
In the face of a market dictated by widening credit spreads, the City’s transaction was able to price at more aggressive levels compared to other similarly rated water and sewer transactions both recently and historical. The City generated more than $6 million of PV savings or 13% of refunded par on the current refunding, All-in TIC = 3.945%, and an Average Life of 21.7 years for the 2015A&B Bonds.