An Ordinance supplementing the City of Houston, Texas Master Ordinance providing for the issuance of Combined Utility System Revenue Obligations to authorize the amendment of qualified hedge agreements with respect to certain outstanding Combined Utility System Bonds.
SUMMARY:
Approve an Ordinance supplementing the City of Houston, Texas Master Ordinance providing for the issuance of Combined Utility System Revenue Obligations to authorize the amendment of qualified hedge agreements with respect to certain outstanding Combined Utility System Bonds. Making other provisions indent thereto; and declaring an emergency.
SPECIFIC EXPLANATION:
The City has qualified hedge agreements with three counterparties that were entered into in 2004 with the objective of hedging against the potential of rising interest rates associated with certain Combined Utility System variable rate bonds. The Finance Working Group (FWG) has been monitoring the value of the hedge agreements and has internally agreed to explore opportunities to improve the City’s cashflows, under these agreements.
The combined notional value of these swap agreements is $902.4 million.
The City has agreed to amend the existing swap agreements that would convert the base for the floating rate the City receives from 1 Month LIBOR to a 10-Yr. LIBOR Swap Rate, for a negotiated period of time. The final maturity and all other terms of the swap will remain unchanged.
This transaction was presented to the Budget and Fiscal Affairs Committee on August 7, 2018.
Recommendation:
The FWG recommends the approval of this item.
______________________________ ______________________________
Tantri Emo, Chief Business Officer Chris B. Brown, City Controller
and Finance Director