MWD has paid nearly $88 million to get out of a series of “risky” financial ventures, and the agency still has a liability of $71.5 million related to those deals, according to an investigation by the Voice of San Diego. It says those payouts and the remaining liability “show Metropolitan got the raw end of the deals and lost.”
The story, published Aug. 4, 2017, was part of a review of local public agencies that engaged in a financial practice known as “swaps.” According to the story, “MWD entered two dozen interest-rate swap deals, which, in a convoluted way, aimed to stabilize debt interest rates, but amount to bets on the way interest rates will go. If interest rates move one direction, the swap becomes an asset. If they move the other direction, it becomes a liability.”
The Voice of San Diego used Public Records Act documents to show that “Metropolitan’s swaps stood out because leaders there invested more heavily in them than the rest – tying nearly $2 billion in debt to swap contracts – and paid a heftier price for doing so when it wanted out of the losing deals.”
Click here to read the story.