wastewater system revenue refunding obligations, presentation
TRANSCRIPT
$13,485,000*Wastewater System Revenue Refunding Obligations, Series 2019(Refunds WIFA Loan 910104-08A)
Presented By:Mark Reader
Managing [email protected]* Estimated, subject to change.
November 12, 2019
Table of Contents
2
Page
Debt Profile – WIFA Loan 2008A 3
Market Update 4
Wastewater WIFA Loan Refunding 7
Financing Calendar 10
Disclosure 11
Debt Profile – WIFA Loan 2008A
3
20-year Amortization, Average Life: 12.2 years
$2.1 million Cash Funded Debt Service Reserve Fund
$750,000 Rate Stabilization Fund
1.20x coverage requirement
$28,350
Water Infrastructure Finance Authority
of Arizona
Fiscal Loan No. 910104-08A
Year Dated: 4/25/08
Ending
(July 1) Principal Coupon
2020 $1,517 3.723%
2021 1,574 3.723%
2022 1,632 3.723%
2023 1,693 3.723%
2024 1,756 3.723%
2025 1,821 3.723%
2026 1,889 3.723%
2027 1,959 3.723%
2028 2,032 3.723%
$15,874
Call 7/1/20 and After
Features: Callable 12/8/19
@ par
Municipal Market Outlook – Week of October 28, 2019
4
UPCOMING ISSUANCE RATE DATA
TODAY WEEK PRIOR MONTH PRIOR YEAR PRIOR
AAA GO
2 YEAR 1.15 1.12 1.22 2.04
5 YEAR 1.18 1.15 1.23 2.27
10 YEAR 1.51 1.47 1.42 2.68
15 YEAR 1.73 1.69 1.63 2.97
20 YEAR 1.92 1.89 1.83 3.18
30 YEAR 2.10 2.07 2.01 3.32
US TREASURY
2 YEAR 1.64 1.59 1.63 2.82
5 YEAR 1.65 1.58 1.56 2.93
10 YEAR 1.83 1.78 1.68 3.09
MAJOR ECONOMIC DATA 30 YEAR 2.31 2.28 2.13 3.32
DAY ESTIMATE ACTUAL FED FUNDS 1.75-2.00 1.75-2.00 1.75-2.00 2.00-2.25
Wholesale Inventories - Sep 28-Oct 0.2 -0.3 PRIME RATE 5.00 5.00 5.00 5.25
Consumer Confidence - Oct 29-Oct 128 MIG 1 - 1YR 1.25 1.25 1.30 2.03
Gross Domestic Product - 3QA % 30-Oct 1.6 MUB ETF 113.790 113.990 114.100 107.330
FOMC Rate Decision 30-Oct 1.50-1.75% SIFMA 7DAY 1.19 1.29 1.58 1.60
Personal Income / Spending - Sep % 31-Oct 0.3/0.3 MSRB 7DAY TRD $51,365MM $43,927MM $57,773MM $59,353MM
Change in Nonfarm Payrolls / Unemploy. Rate 1-Nov 85K/3.6% BOND BUYER INDEXES
ISM Manufacturing - Oct 1-Nov 49.0 20 Bond GO1
2.75 2.70 2.66 4.30
TAXABLE MUNICIPAL GO/MAKE WHOLE TREASURY SPREAD 11 Bond GO2
2.2.9 2.24 2.20 3.79
5/5 10/10 20/30 30/30 25 Bond REV3
3.23 3.18 3.14 4.80
AAA 32 62 73 80
AA 40 71 83 90 1 GO bonds maturing in 20 years, avg. rating equivalent to Moody's Aa2 & S&P's AA
A 73 112 113 120 2 GO bonds maturing in 20 years, avg. rating equivalent to Moody's Aa1 & S&P's AA+
BBB 135 180 180 185 3 Revenue bonds maturing in 30 years, avg. rating equivalent to Moody's A1 & S&P A+
COMMENTARY
$305MM California MFA Rev - United Airlines, -/ap/-, 2029
$252MM Southern California Tobacco Sec Auth Rev, -/ap/-, 2020-48
$415MM Southern California Tobacco Sec Auth Rev, NR/NR/NR, 2020-48
$915MM New York State Taxable GO, Aa1/AA+/AA+, 2020-2041
$737MM Phoenix, AZ Civic Imp Jr Lien Airport Rev (400AMT/337TE), , -/A+/-, 2020-49
$416MM Lehigh Cnty, PA Hospital Rev , A2/A+/NR
$983MM Broward Cnty, FL Airport AMT/T Rev, A1/A+/A+, 2020-49
30-Day Visible Supply: $15.8 Billion 7-Day Visible Supply: $8.68 Billion
RELEASE
Fixed Income rates for both US Treasuries and Municipals moved higher last week across the curve as markets moved toward a greater risk sentiment. Supply is expected to be manageable this week
at $8.68 billion scheduled but only $5.1 billion tax-exempt on the Municipal calendar. The ratio of AAA Municipal GO's to US Treasuries is still supportive for Municipal demand (5YR- 71.5%, 10YR-
82.5%, 30YR-90.9%). Lipper reported a 42nd straight week of inflows for Municipal Mutual Funds at $1.4 billion for the week ending 10/23. The four-week moving average decreased to a positive
$1.23 billion. Market focus early this week will be on the FOMC rate decision Wednesday. Bloomberg Fed Funds Futures shows a 90.9% probability of a 25 basis point rate cut. It is a heavy week for
economic data and corporate earnings, concluding with the October employment reports on Friday.
$250MM New York City, NY TFA Rev, Aa2/AA/AA, 2021-49
$621MM Wisconsin State Taxable Rev, Aa2/-/AA, 2021-32
$335MM California Pub Works Rev, Aa3/A+/AA-
-0.5%
0.5%
1.5%
2.5%
3.5%
4.5%
5.5%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
10-Year HistoricalMMD RangeCurrent MMD
Interest Rate Movement
5
Taxable and Municipal Rates See Large Fluctuations Since Early August
30-Year MMD Yield is Near its All-Time Low Record, Previously Set in AugustComparing 30-Year UST and 30-Year AAA MMD since June 2018
10-Year MMD Emerges From Volatile PeriodComparing 10-Year UST and 10-Year AAA MMD since June 2018
Recent MMD and UST MovementOctober 15, 2019 to October 24, 2019
Source: TM3, US Treasury. As of 10/24/2019.
Long-Term Rates Emerge from Bottom Of 10-Year Historic Range10-Year Historical AAA MMD Range vs. Current AAA MMD
4 45
810
9
-3-2
-1 -1
0
3
-10
0
10
20
2Y 3Y 5Y 7Y 10Y 30Y
Bas
is P
oin
ts
MMD UST
1.0%
1.4%
1.8%
2.2%
2.6%
3.0%
3.4%
3.8%
Jun
-18
Jul-
18
Au
g-18
Sep
-18
Oct
-18
No
v-18
Dec
-18
Jan-
19
Feb
-19
Mar
-19
Ap
r-19
May
-19
Jun
-19
Jul-
19
Au
g-19
Sep
-19
10-Year MMD: 1.51%
10-Year UST: 1.77%
1.0%
1.4%
1.8%
2.2%
2.6%
3.0%
3.4%
3.8%
Jun
-18
Jul-
18
Au
g-18
Sep
-18
Oct
-18
No
v-18
Dec
-18
Jan-
19
Feb
-19
Mar
-19
Ap
r-19
May
-19
Jun
-19
Jul-
19
Au
g-19
Sep
-19
30-Year MMD: 2.10%
30-Year UST: 2.26%
New Issue Supply and Demand
Tax-Exempt Fund Flows Recent Weekly Municipal Bond Fund Flows
New Issue Supply Remains StrongPrevious 12 Weeks of New Issue Supply and Forecast of Current Week
Favorable Supply & Demand Dynamic Shifting with Several Weeks of Above Average Supply
• Supply & Demand:
– Supply remains extremely healthy, with October having doubled its original expected supply of $13 billion.
However, demand for investment-grade municipal bonds has quickly consumed most available supply throughout the previous half-year.
September was a record month for corporate bond issuance, with companies selling over $300 billion in bonds for the first time ever.
– Current average muni supply remains above the 2018 level.
This week’s new issue supply is expected to be approximately $7.7 billion, which is down from last week’s $10 billion.
• Municipal bond funds saw $1.427 billion of inflows during this past week
– This is up from last week’s total of $1.2 billion, and marks the 4th time within the past 5 weeks that inflows have exceeded $1 billion, indicating very strong muni demand.
– Lipper reported its 42nd consecutive week of inflows into municipal bond mutual funds, the longest since a 54-week streak that ended in October 2016.
Source: Lipper, Thomson Reuters, SIFMA, IHS Markit. As of 10/24/2019.6
$0
$2
$4
$6
$8
$10
$12
$14
8/5 8/12 8/19 8/26 9/2 9/9 9/16 9/23 9/30 10/7 10/14 10/21 10/28
$ in
Bil
lio
ns
Week Of
NationalWeekly NewIssue Volume
2017 Weekly Average:$7.3 Billion
2018 Weekly Average:
$5.2 Billion
2019 Weekly Average:$6.2 Billion
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
8/5 8/12 8/19 8/26 9/2 9/9 9/16 9/23 9/30 10/7 10/14 10/21
$ in
Bill
ion
s
Week of
Sources and Uses of Funds
7
8
Estimated Savings
• Assumes 2.15% rate
• Extends amortization 3 years to increase coverage
• Assumes release of $2,108,048 Debt Service Reserve Fund and $750,000 Rate Stabilization Fund
Current WIFA Estimated 2019 Estimated Annual Estimated Annual
Fiscal Loan 2008A Refunding Gross Present Value
Year Debt Service Debt Service Savings Savings
2020 2,108,048$ 1,274,628$ 833,420$ 827,006$
2021 2,108,048 1,273,848 834,201 808,687
2022 2,108,048 1,274,176 833,873 791,078
2023 2,108,048 1,274,031 834,018 774,281
2024 2,108,048 1,274,413 833,636 757,355
2025 2,108,048 1,274,300 833,748 741,228
2026 2,108,048 1,274,693 833,355 724,996
2027 2,108,048 1,274,570 833,478 709,549
2028 2,108,049 1,273,931 834,118 694,852
2029 1,274,776 (1,274,776) (1,040,003)
2030 1,274,062 (1,274,062) (1,017,318)
2031 1,273,811 (1,273,811) (995,486)
Totals 18,972,436$ 15,291,237$ 3,681,200$ 3,776,227$
PV Savings: 3,776,227$
Less: Prior Funds (2,858,048)
Plus: Additional Proceeds 422
Net PV Savings: 918,600$
Net PV Savings as a percent of Refunded Bonds: 5.79%
9
Projected Debt Service Coverage*
* Subject to change.
(a) Net System revenues debt service coverage based on the Net System revenues (without depreciation and amortization plus the
$750,000 Rate Stabilization Fund through 2018/19) divided by the System supported debt service for each respective fiscal year.
Audited Pending Audit Forecasted Forecasted Forecasted
2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
Operating revenues:
Service Charge Revenue 3,085,168$ 3,198,886$ 3,250,867$ 3,427,350$ 3,629,713$ 3,702,307$ 3,776,353$ 3,851,880$
Connection Fee Revenue 169,543 194,696 156,362 309,134 536,632 282,199 316,060 618,270
Other Miscellaneous Revenue 1,612 22,112 302,226 291,316 221,230 229,570 106,810 64,655
Total operating revenues 3,256,323$ 3,415,694$ 3,709,455$ 4,027,800$ 4,387,575$ 4,214,076$ 4,199,223$ 4,534,805$
Operating expenses:
General and administrative 223,719$ 519,680$ 369,607$ 252,251$ 378,761$ 425,370$ 418,130$ 390,670
Personal services and employee benefits 632,571 555,574 634,316 708,002 715,879 720,200 741,810 764,060
Operating supplies and services 385,079 505,893 532,337 558,445 529,710 884,740 891,280 898,020
Util ities 215,701 210,749 215,179 232,132 234,759 200,000 206,000 212,180
Total expenditures 1,457,070$ 1,791,896$ 1,751,439$ 1,750,830$ 1,859,109$ 2,230,310$ 2,257,220$ 2,264,930$
Net System revenues for debt service
(without depreciation ) 1,799,253$ 1,623,798$ 1,958,016$ 2,276,970$ 2,528,466$ 1,983,766$ 1,942,003$ 2,269,875$
WIFA Loan 2008A Debt Service 2,108,048$ 2,108,048$ 2,108,048$ 2,108,048$ 2,108,048$
2019 Obligations Debt Service* 1,274,628$ 1,273,848$ 1,274,176$
Total System-supported debt service 2,108,048$ 2,108,048$ 2,108,048$ 2,108,048$ 2,108,048$ 1,274,628$ 1,273,848$ 1,274,176$
Net System revenues
debt service coverage (a) 1.21x 1.13x 1.28x 1.44x 1.56x 1.56x 1.52x 1.78x
Financing Calendar*
Date Event
October 8th FIAC meeting
October 24th Term Sheet/RFP Due Diligence conference call
October 25th Distribute RFP to prospective bidders
October 30th Documents due to Town for November 12th City Council meeting
November 12th Bids Due
November 12th Town Council approval
December 19th Closing
* Subject to change. 10
S M T W TH F S
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October 2019S M T W TH F S
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November 2019S M T W TH F S
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December 2019
Disclosure
11
Stifel, Nicolaus & Company, Incorporated (“Stifel”) is providing the information for discussion purposes and isdeclaring that it has done so within the regulatory framework of MSRB Rule G-23 as a financial advisor, as definedtherein, and not an underwriter to the issuer for this proposed issuance of municipal securities. A “financial advisoryrelationship” shall be deemed to exist when a firm enters into an agreement to render financial advisory or consultantservices to or on behalf of an issuer with respect to the issuance of municipal securities, including advice with respectto the structure, timing, terms and other similar matters. Accordingly, any services provided by Stifel as they relate toour role as financial advisor should not be construed as those of an underwriter or placement agent.
These materials have been prepared by Stifel for the client or potential client to whom such materials are directlyaddressed and delivered for discussion purposes only. All terms and conditions are subject to further discussion andnegotiation. Stifel does not express any view as to whether financing options presented in these materials areachievable or will be available at the time of any contemplated transaction. These materials do not constitute an offeror solicitation to sell or purchase any securities and are not a commitment by Stifel to provide or arrange anyfinancing for any transaction or to purchase any security in connection therewith and may not relied upon as anindication that such an offer will be provided in the future. Where indicated, this presentation may containinformation derived from sources other than Stifel. While we believe such information to be accurate and complete,Stifel does not guarantee the accuracy of this information. This material is based on information currently available toStifel or its sources and are subject to change without notice. Stifel does not provide accounting, tax or legal advice;however, you should be aware that any proposed indicative transaction could have accounting, tax, legal or otherimplications that should be discussed with your advisors and /or counsel as you deem appropriate.