DC Water’s October bond sales win investors
October 28, 2019
DC Water’s finance team wrapped another successful bond sale Thursday, marking the second time this month the Authority has been oversubscribed.
In Thursday’s sale, DC Water issued $100 million in tax-exempt, variable-rate bonds. The subordinate-lien bonds were eight times oversubscribed, with a 35-year maturity and a total interest cost of 2.90 percent. The proceeds from the $100 million of Series C bonds will be used for projects in DC Water’s Capital Improvement Program, to upgrade, repair and replace aging water and sewer infrastructure.
On October 8, DC Water offered two series of new money and one series refunding $300 million 2013 bonds. The new money subordinate-lien bonds totaled $200 million. Matthew T. Brown, DC Water CFO and EVP, Finance and Procurement, commented, “This was a great time to go to the market both for new-money and taxable refunding offerings. Being oversubscribed yet again demonstrated continued investor confidence in DC Water.”
Back in August, Fitch Ratings upgraded DC Water’s credit rating. DC Water’s ratings on senior lien public utility revenue bonds improved to ‘AA+’ from ‘AA,’ and on subordinate lien public utility revenue and refunding bonds, Fitch upgraded the Authority to ‘AA’ from ‘AA’. Standard and Poor’s upgraded the Authority to AAA in 2016.
Better credit ratings result in lower interest rates for repayment, in general, which demonstrates good stewardship of ratepayer dollars. David L. Gadis, DC Water CEO, said, “Our large capital projects are almost entirely funded by current and future ratepayers. Going to the bond market provides the capital for us to invest in water, sewer and wastewater infrastructure, including the $2.7 billion Clean Rivers Project that is significantly improving the health of the Anacostia River and will soon benefit Rock Creek and the Potomac.”
DC Water’s last bond offering was in April 2018 and was well subscribed with orders received of over $1 billion. In 2014, the Authority issued a $350 million green century bond and in 2015 issued an additional $100 million in green bonds. The former earned Bond Buyer’s “Regional Deal of the Year Award” and the IWA Global Water Awards for “Water Deal of the Year.”