Deptartment of Water and Power

$315,000,000
Series A-2 Bonds

Los Angeles' Department of Water & Power is the largest municipal utility in the United States, created more than 100 years ago and now serving 3.8 million residential and business customers. Last year, the DWP solicited ideas from its team of negotiated underwriters for financing up to $1.2 billion of capital improvements in its power grid, and another $600 million in its water system.

De La Rosa & Co. suggested the DWP finance as much of the upgrades as possible with one large bond issue so each system could borrow most of these funds at currently low interest rates. The department would face the strong possibility of rising interest rates if it financed the improvements in pieces over the next three to four years. The utility decided to proceed with this approach and selected De La Rosa & Co. as Senior Managing Underwriter for $315 million of Series A-2 Bonds for the power system.

On Dec. 15 – the sale date for the bonds – interest rates began to rise and continued upward throughout the day. In that environment, De La Rosa & Co. held a 1-hour order period for investors. To successfully place the bonds and protect the DWP from rising rates, De La Rosa restructured the coupons after the initial order period on $20 million of the 2025 maturity, $12 million of the 2026 maturity, $25 million of the 2029 maturity, and $30 million of the 2030 maturity. The firm also underwrote $26.75 million of the issue.

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