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Aimed at cost-cutting, Water Authority launches bond refunding

The San Diego County Water Authority announced on Thursday that it has initiated a bond sale expected to reduce the cost of financing water supply reliability projects through the next two decades.

On Wednesday, the Water Authority priced a $195 million bond sale that, according to the Water Authority, generated more than $1 billion in demand by a diverse array of investors.

When completed, the sale of Senior Lien Water Revenue Refunding Bonds Series 2015A will reportedly refund $195 million in long-term, fixed-rate bonds issued in 2008 and 2010, and allow the Water Authority to lower yields in each maturity versus the pricing's initial launch.

The refinancing is expected to save the Water Authority $15.1 million through 2029 on a net present-value basis.

“This strategic move is part of our overall effort to cut expenses so we can continue to provide a safe and reliable water supply at the lowest possible cost,” Water Authority Board Chair Mark Weston said in a statement. “By maintaining strong credit ratings even during challenging drought conditions and systematically seeking better rates on our debt, we have saved ratepayers tens of millions of dollars in recent years and reduced the impact of future water rate increases.”

The bond sale is part of what the Water Authority said is a long-term plan to cut the cost of financing its Capital Improvement Program.

The Water Authority similarly executed a $139.9 million senior lien refunding bond sale in July 2011 — designed to save $13.5 million through 15 years, while a $5.2 million savings was reported in September of that same year on a separate $94.5 million bond refunding sale.

The Water Authority reports having saved $51 million in 2013 by refunding $299 million in revenue bonds.

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