The Public Utilities Commission of the City and County of San Francisco issued $123.9 million in bonds to refund a previous issuance and finance capital projects.
The bonds mature between 2026 and 2053, yielding between 3.15% and 4.5%. They received a rating of AA from S&P Global Ratings and AA- from Fitch Ratings.
The rating reflects “the very strong financial profile of the Power Enterprise, factoring in sizable capex plans and debt issuance scheduled to occur over the next five years,” Fitch analysts wrote. They added that “continued strong financial performance will depend heavily on planned rate increases.”
The commission is planning significant rate increases over the next five years. In July, it raised retail rates by 14%, and it anticipates annual increases between 6% and 10% through 2028. During that period, the power commission’s capital plan calls for $671 million in expenditures, much of which will be financed by bonds.
Most of the bond proceeds, about $118 million, will refund previously issued commercial paper notes.
The commission provides almost one-fifth of the electricity consumed in San Francisco. The bonds are special limited obligations of the commission, payable by net revenue of the San Francisco power utility.
J.P. Morgan Securities LLC served as lead underwriter on the issuance, purchasing the bonds for $131 million. The price reflected a premium of $7 million.