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San Diego refinances while awaiting treated seawater

San Diego County Water Authority sold $299.1 million in refunding debt as the California agency builds the Western Hemisphere's largest water-desalination plant.

Rates on the Feb. 13 deal ranged from 1.13 percent on securities maturing in 2019, five basis points above a top-rated benchmark, to 3.43 percent on those due in 2033, 88 basis points over a benchmark. The final maturity, 2034, was priced to yield 2.86 percent, a spread of 25 basis points, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

The authority, which serves 97 percent of the population in San Diego County, plans to spend $754.4 million on capital projects, a third of which will be used in the fiscal years ending in June 2013 and June 2014, bond documents say.

One of the authority's initiatives is a public-private partnership with Poseidon Resources LP, a Stamford, Conn.-based company that develops and invests in water infrastructure projects. Of the $922 million in costs, $734 million was raised through tax-exempt bonds issued by the California Pollution Control Financing Authority on behalf of Poseidon and the San Diego authority, according to a December statement from Poseidon.

The plant, 35 miles north of San Diego, will open in 2016. It will treat Pacific Ocean water and will be the largest such facility in the Western Hemisphere, according to Poseidon. A 10-mile pipeline will deliver about 50 million gallons of treated water daily from the plant to the county's water system, Poseidon said.

The authority's bond sale last week, which refunded 2004 senior-lien water revenue bonds, was rated Aa2 by Moody's Investors Service, its third-highest level, and AA+ by Standard & Poor's, its second-highest.

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