DEPARTMENT: Finance
DEPARTMENT HEAD: Troy Elliott
COUNCIL DISTRICTS IMPACTED: City Wide
SUBJECT: SAWS Revolving Credit Agreement
SUMMARY:
Ordinances authorizing amendments to the revolving credit agreements relating to the City's tax-exempt commercial paper program for the benefit of the San Antonio Water System ("SAWS").
BACKGROUND INFORMATION:
SAWS' capital financing structure includes an authorized tax-exempt commercial paper ("TECP") program in the amount of $500 million. This program provides short-term, variable rate financing for capital improvement projects. Utilization of short-term debt is an integral part of SAWS' overall debt management plan. The TECP program provides interim financing and allows SAWS the flexibility of issuing debt as needed, matching construction funding with construction expenditures.
The proposed ordinances authorize amendments to the current revolving credit agreements. A revolving credit agreement is an agreement, typically entered into with a bank or banks, to provide liquidity services for short-term debt instruments. The liquidity provider will purchase the commercial paper notes should the remarketing dealers be unable to find buyers in the financial markets.
The current revolving credit agreements provide support for two series of notes, with Bank of Tokyo-Mitsubishi UFJ, Ltd. ("Bank of Tokyo") providing liquidity support for the Series A Notes in an amount of $250 million, and Wells Fargo Bank, N.A. ("Wells Fargo") providing liquidity support for the Series B Notes in an amount of $150 million, for a combined amount of $400 million. The current fee for the liquidity support is 50 basis points (or 0.50%) per annum, for an annual fee of approximately $2,022,000. The current revolving credit agreements are set to expire October 5, 2015; however, under the terms of the agreements, a request to extend the agreement and/or modify the terms of the agreement is permissible.
Since the a...
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