Transaction Summary

Siebert Cisneros Shank & Co., L.L.C. served the City of Sacramento as sole manager for its Series 2019 Bonds, which priced on March 27, 2019. Proceeds are being issued to finance the cost of improvements to the Wastewater System including the complete reconstruction of wastewater sumps, pipe rehabilitation projects, replacing aging infrastructure, and the continuation of the Combined Sewer System improvement program.

The Series 2019 Bonds were the second stand-alone Wastewater Revenue Bond issuance following the Series 2013 Wastewater Revenue Bonds.

They are secured by a pledge of System Net Revenues under a Master Indenture on Parity with the Series 2013 Bonds and SRF Loans. The Series 2019 Bonds were structured with a 20-year final maturity and principal amortization commencing in 2021 to allow for the City’s SRF debt to fully amortize in 2020, thereby producing a more level structure in aggregate with the remaining Series 2013 Wastewater Revenue Bonds.

The week prior to pricing, S&P upgraded the credit to AA from AA-, reflecting the Wastewater System’s projected all-in coverage metrics at above 2.0x, extremely strong liquidity position at $39 million, and strong financial management assessment.

Marketing Conditions

Yields moved decidedly lower during the week of pricing in both treasury and municipal bonds, to the lowest yields of the year. Concerns about a slowing world economy and the total reversal in Fed policy to not raise short-term rates in 2019 were primarily responsible for lower rates.

Pricing Results

As a result of SCS’s aggressive pricing strategy, the transaction received $54.8 million orders and the bonds were over 2.1x oversubscribed. The 7-year maturity (due in 2026) was 3.8x oversubscribed. 18 accounts submitted orders including 17 new accounts who were not reported as current holders of the Series 2013 Bonds. SCS agreed to underwrite $190,000 of bonds to maintain aggressive pricing levels for the City.

Overall, the transaction priced successfully and lower than the City’s Series 2013 Bonds issuance, with an All-In TIC of 2.91% and an average life of 12.9 years.