Shanghai Water Services Assets Operation and Development Company Municipal Bond Issuance - China
| (May 2004) Mayflower Partners LLC was contracted by the U.S. Trade and Development Agency (USTDA) to review a new
terms of reference and budget for the addition of funds to a municipal bond financing technical assistance program for
the Shanghai Water Services Assets Operation and Development Company, Limited ("SWAOD" or "Grantee"), in the People's
Republic of China. If completed, this would be the first municipal bond financing in the water sector in China.
By successfully tapping the local capital markets, SWAOD would greatly expand and diversify its sources of funding
for its capital improvement program and enhance its ability to optimize the performance of the water and wastewater
assets in Shanghai. |
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The first of a series of long-term enterprise bonds for SWAOD were supposed to be issued in 2004 but the Grantee
requested a delay in the first bond issuance for one more year. The U.S. contractor, Black & Veatch, was advised
that the application was being reviewed by governmental authorities in Shanghai and will later be sent to the national
government in Beijing for review and approval for the issuance of bonds. The national government agency responsible
for approving the issuance of any type of municipal bonds is the National Development Reform Committee (NDRC) in Beijing.
Black & Veatch has also been advised that, subject to national governmental approval, the first sale of revenue-backed
bonds will likely take place no sooner than the Spring or Summer of 2005.
Mayflower Partners was hired to advise USTDA on the appropriateness of changes to the terms of reference including:
- Inclusion of SWAOD’s 2004 financial results in the disclosure documents for the initial bond issue,
- Updating of the five – year capital investment requirements, the five – year capital investment financing program and plan of revenue adjustments to reflect the 2004 results,
- Evaluation of options for restructuring tariffs and evaluating customer data provided by SWAOD to design a potential alternative tariff rate structure,
- Assistance in the preparation of the application for bonding approval to be filed in 2004 and 2005,
- Participation in additional meetings necessitated by the change in the expected date of the initial bond issue.
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