By Pacific Island Times News Staff
The Guam Waterworks Authority has successfully priced $184.9 million in refunding bonds, reducing future debt service payments and achieving
net present value savings of $14.5 million with all-in true interest cost of 3.97 percent.
The GWA team, supported by the Guam Economic Development Authority and the Bureau of Budget and Management Research, took advantage of market rates and strong investor interest with $2.156 billion in total orders from 41 different investors.
The GWA financing included a tender structure utilized for the first time by
a Guam issuer, a technique that has become common in recent months as interest rates have declined since their peak levels in the fall of 2023.
The structure allowed GWA to offer to buy bonds from existing GWA
bondholders and sell current refunding bonds to finance the purchase.
In the current interest rate environment, municipal issuers increasingly use tender offers to generate debt service savings.
“GWA and GEDA, with BBMR and their advisors, put a lot of hard work into generating interest for this refunding, and the 11.6-times oversubscription reflects strong demand and investor confidence in what GWA is doing. The Consolidated Commission on Utilities is very happy with the significant
savings in debt service that our team has worked to achieve,” said Joey Duenas, chairman of the commission.
“It is gratifying to see the level of investor participation in this refunding, especially the tender transaction, which is a first for Guam and added about $9 million in debt service savings on refunding bonds that we otherwise would
never have realized,” said Miguel C. Bordallo, GWA manager.
The tender had an overall success rate of 36 percent investor participation,
with the tax-exempt Series 2016 & 2017 bonds targeted to reach 44 percent participation and the taxable Series 2020B bonds targeted to reach 26 percent. (GWA)
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