AVEK scores gains in financing move



June 29, 2016
Contact: Dwayne Chisam, General Manager
Antelope Valley-East Kern Water Agency
Email: info@avek.org  =  Tel. (661) 943-3201

AVEK scores gains in financing move

 PALMDALE, CA – Action taken in the second quarter by management and board of the Antelope Valley-East Kern Water Agency to refinance Certificates of Participation (COPs) issued in 2007 and 2008 has decreased the Agency’s outstanding debt by $9,675,000, and reduced the average annual debt service payment by $469,061.

The amount of COPs re-funded was $80,765,000, which was replaced with $71,090,000 worth of 2016 Water Revenue Re-funding Bonds issued. The new bonds were issued with the same maturity date as the previous COPs. 

AVEK Board President Keith Dyas explained that proceeds from the original COPs issued in 2007 were used for water treatment plant and distribution system upgrades and expansion, as well as water banking facilities to assure availability of water to AVEK’s customers in times of drought.

The newly issued and less expensive bonds will permit AVEK to go forward with projects to assure an uninterrupted supply of high quality, affordable water from the California Aqueduct.

The opportunity to re-fund the COPs at lower rates came from the water agency’s high credit ratings. In 2015, New York-based Moody’s Investors Service upgraded the Antelope Valley-East Kern Water Agency’s COP credit rating from A2 to A1, which allowed the Agency to realize substantial long-term cost savings with lower interest rates. 

 Moody’s notified AVEK that “the upgrade reflects the agency’s improved debt service coverage that is expected to remain satisfactory, very strong liquidity position as well as the recent increased access to a broader supply of water.”

 Likewise, Standard & Poor's rated the new bonds AA, which was an upgrade to their rating of AA- that S&P had previously given them reflecting the Agency’s credit-worthiness.

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