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<br />.
<br />
<br />.
<br />
<br />
<br />E(J(;h qu4rf~r WS TefXNU on dewJopmellts in th~ bond morIcn
<br />and dsewhert thot shQ[H waler jinanCf! policy.
<br />
<br />Waler financing had an unusually strong third quarter..
<br />with a grCl:.SS volume of $1,287 million, sustaining the vigorous
<br />second quarter level oCSl,274--almost double the $681 million
<br />gross volume in lhe third quarter of 1990. It was raised lhrougb
<br />87 i5sues(compared to 73 last year) aodalmost all bycilies and
<br />irrigation dislricts. The influence of rising demand for mumci-
<br />pal water, mounting con-
<br />cern over waler quality,
<br />and greater emphasis on
<br />reclamation outweighed
<br />the fLSCal drag caused by
<br />the persislenl recession.
<br />
<br />T_,
<br />SUnotef'I1l.iriQurierl"J
<br />NeCvo""'-bySQ,fe
<br />
<br />CaMomill 11.9
<br />CoIo~ 10.7
<br />W~ington 7:J
<br />TCU5 5.1
<br />Sol/lhD.tota 2_<4
<br />Ka~ .6
<br />Uu.b .4
<br />Ok.lahom.l .4
<br />NcbfNOu .2
<br />On~ .2
<br />NcvaQ .2
<br />Soo.rw:Cotapoltdl'l'~/N.._
<br />~D-.(".v_~
<br />---
<br />
<br />BOND MARKET
<br />UPDAtE
<br />
<br />Borrowers from 13
<br />slates raised $1,129 million
<br />from new issues (excluding
<br />$145 million in refi-
<br />nancings). Borrowers in
<br />Califoruia accounted for 71.9 percent o((hc total (raising $81 1
<br />million), followed by 10.7 percent by borrowers from Col~
<br />",do (raising $120.5 million), and 7.3 percent by borrowers
<br />from Wa.sblugtoa (Table 1).
<br />The largesl single issue was for S300 million by Southern
<br />California Metropolitan Waler District (see Table 2), fol-
<br />lowed byan issue of$170 million by IheCityofSan Francis<:o.
<br />Colorado River Municipal River Authority and the West
<br />Basin Water District of California were tied for third, both
<br />with issues of $115 million. California issuers accounted for
<br />ten of (be twenty larges! issues. Cities raised 37 percen! of the
<br />/Jew money. districts rai~d 44 percent, and statcs 11 percent
<br />(see Figure 1).
<br />Net interest costs during the lrurd quarter averaged 6.92
<br />percent, down from 7.03 percent during the second quarter,
<br />and below !he average of7.23 percent during the third quarter
<br />last year (see Table 3). In response to sluggish economic
<br />indicators, !he Fed ffiO\'cd to push rates furtber do....'tl in
<br />Seplember..promising fourth quarter rales tbat should be
<br />even lower. The relalively low levels of refinancing during the
<br />second and the lhird quarters this year suggeSls that mosl
<br />borrowers are holding out for lower rates laler. Water bonds
<br />performed well during !he quarter, tbeir average NIC was 1
<br />basis point below the overall Bond Buyer Index (or GO bonds
<br />and 16 basis points below the Bond Buyer Index for revenue
<br />bonds.
<br />Spreads were down sharply again after scveralquartcrs of
<br />increases. This reflected, in parI, the large average sue of
<br />issueshSI4.79 millinn. Large issues command lower spreads.
<br />
<br />.
<br />
<br />rip'" 1
<br />Vot.-e B, AtNIiIoriry,.,.,. ('J'WJ1t ~u 1"1)
<br />
<br />C"
<br />'"
<br />
<br />
<br />St!lt9
<br />...
<br />
<br />Otl"ltlrt.0(:8
<br />"
<br />
<br />Sooonr. ~bJs..--. ''''<:. _~n..co.
<br />
<br />During lhe third quarter, spreads fell to $15..36 per $1,(0) of
<br />face value from $18.92 in the second quarter. This was below
<br />the average of$18.56 during !he lhird quarter nf 1990. About
<br />24 percent of new issues were insured, raising an unusually
<br />high 52 percent o( bond proceeds.
<br />
<br />Bond Charnctf'ristic.!l
<br />
<br />.
<br />
<br />Fifteen of the twenty largest issues, 56 nul of$7 dollars of
<br />total procecd<i, and 52 oul o( 87 Ls..<iUCS were raised through
<br />revenue bonds (Table 3). However, the overall average Me
<br />on revenue bonds was 27 basis points above tbe average NIC
<br />on GOs-- 7.05 percent versus 6.78 percent. As usual, GOs were
<br />more favored among small borrowers (accounting for 9 out of
<br />
<br /> Tab" 2:
<br /> ~~""WM...I"-5
<br /> (IlllrdQu.rt~(I"I)
<br />,- -- ,- ~,-
<br /> ""'" ,.".
<br />S-CA_n ~. ~ ~. -.-
<br />~~."",-,>c.,."'c., ... ~ e.." MnnIIl.J'OdoC_a1~.
<br />co Rh. M...._If".""'... 1l5J1 ~ - ............
<br />w"'*"'WD.CA lIJ.O ~ '"' s..,,~ Il&rtwyllan'w
<br />R.u<toaCA...."DF.......... 'll ~ '"' 'il.",.,v.......
<br />~,. "' 00 e.." Cloo_5oraonI...
<br />~.....co.AZ m ~ ,~ R.o.........'...uRrfrloal
<br />'.....cA ., ~ ,~ ~-
<br />o..-.-c.,.4<o '" 00 e.." HamoT,,*
<br />C-. C.,..CA ., ~ e.." "'--""-_s..n.......
<br />s-..F....SD '" 00 ,~ ~~.sr......",y_
<br />.......... n. ~ ,~ R.o_rona-~
<br />CoJlrw-lo4.....fUo,A..... U.9 ~ ,~ p_ s--.,.
<br />C-..- lofL'D.TX 'U 00 ~.. Rio_'I"lrRl<_
<br />..... '-'" '" ~ '" S1.-V.,...
<br />"-" '" ~ ~cl T>-...-.- I 0l!Iua" Jnm..
<br /><;_...,..co '" 00 e.." ......,-
<br />~c..,..so ." ~ Sq --
<br />C_C,,\l.'l).cA .., .. Sq 'k.-rY,""",
<br />Appl< v..,. II.D.cA .. ~ '" '-,-
<br />. ---..... '\'O~C)
<br />~- C__t,.'--'hooc _soc__
<br />
<br />1111
<br />
<br />\VATER STRATEGIST Publi,hed hy S"'lemn, Ine, p.o, Bo. %3, Clmmont, CA 9171 I (7") 621"793
<br />
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