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Alabama County Sells $2.5 Bln in Bonds

By Munichain News Desk

Jefferson County, Alabama, issued $2.5 billion in sewer revenue bonds to refund previously issued securities.

The bonds mature between 2024 and 2053, yielding between 3.05% and 4.51%. They received a rating of BBB+ from S&P Global Ratings and Baa1 from Moody’s Investors Service. 

The rating “reflects the sewer enterprise’s continuously satisfactory financial performance and debt service coverage, which is expected to persist,” Moody’s analysts wrote.

The issuance broke a holiday lull to mark the largest municipal bond offering of the year so far. Analysts expect the deal to be one of the biggest tax-exempt bond sales of 2024.

It is also a return to form for Jefferson County, which became the largest municipal bond issuer to go bankrupt 13 years ago, amid fallout from the 2008 financial crisis.

The bond proceeds will refund sewer revenue bonds the county sold in 2013—debt financing that helped the county exit bankruptcy.

Rate hikes were essential to the county’s restructuring strategy. Between 2013 and 2022, the county raised sewer rates by more than 76%, according to the official statement accompanying the sale of the bonds. The county intends to continue raising rates by 3.5% annually. 

Despite its fiscal resurgence, the county sewer system still faces significant financial needs. S&P analysts noted that the system requires more than $1 billion in capital spending over the next decade. That financing needs to occur without further bond sales, they wrote. 

Jefferson County is the most populous county in Alabama and includes the city of Birmingham. The county’s sewer system services more than 130,000 residential customers and 12,200 commercial customers. The bonds are limited obligations of the county, payable by sewer system revenue.

Raymond James & Associates, Inc served as lead underwriter on the issuance. Public Resources Advisory Group, Inc and Terminus Municipal Advisors, LLC acted as financial advisors.

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