Bond rates frustrate Coweta water authority

by SARAH FAY CAMPBELL

The bond market has moved in the past few weeks, and not in the direction the Coweta Water and Sewerage Authority had hoped. 

The authority is working on preparing a bond issuance, but it is going to take time and there may be the need to re-validate the bonds. 

That process could take two to three weeks, or even longer considering the upcoming holiday and a seminar that all superior court judges will be attending later in July, according to authority attorney Melissa Griffis. 

Two weeks ago, the authority voted to move forward with the issuance of new bonds, which will be used to refinance existing bonds and level the authority’s debt service, which will skyrocket in 2016 without some action. 

The authority has been delaying the bond sale since last fall, on the advice of bond consultants, while waiting for rates to improve. Hopes were to net a substantial savings, even as much as $2 million. Two weeks ago, the expected savings was $391,000. 

Since that meeting, “the rates are moving against us,” said Authority CEO Jay Boren at Thursday’s meeting. They’re up 25 basis points, including 15 points in just one day. 

“We’re hoping the markets settle down,” Boren added. 

A meeting with all the players is set for Monday. 

The work is ongoing. “We’ve had multiple conference calls,” said CFO Andrew Caldwell. 

The authority is considering a few options, and some of those might require re-validation. “Some of the different options that they are looking at would modify it such that we would potentially need to revalidate,” Griffis said. “I am speaking with our bond counsel this afternoon.”

Griffis said she will be discussing things with bond counsel “so that Monday can be as productive as possible.”

Authority member Eric Smith said he had read something Thursday saying that bond rates are going back up. 

“Right now, I’m skeptical we are even going to issue the bond,” Smith said. 

There was a slight “blip” in the market last week, said Chairman Neal Shepard. 

“Do you think we are going to have another opportunity?” asked Smith. 

“I bet we do,” Shepard said. 

Boren said bond consultant Tony King said he believes the market may settle and that there may be another opportunity. King doesn’t feel the authority needs to rush. 

The bond attorney had the same opinion, said Griffis. But things are taking longer because they are considering other options. 

“Bond rates aren’t as big an issue as the restructuring in the long run,” said Shepard. There’s typically a market swoon in the late summer and early fall and “people always turn to the bond market.”

But when the rates are right, “we should be ready.”

Smith said he finds it frustrating that “the process is so slow and drawn out. 

“We said to go ahead and move on it at the last board meeting and by the time you get through this process the markets have moved and we’ve missed the opportunity.

“But you can only do what you can do,” Smith said. 

“It is frustrating,” said Shepard. But “if we are guilty of anything it’s caution. We may be being overly cautious. There is no way you can anticipate what the market is going to do. Worst-case scenario, we end up not doing anything,” Shepard said.

“I remain optimistic that there will be an opportunity for us to make a move and improve our debt structure, or structure it in a way that is more favorable than it exists today,” said Caldwell. 




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