Atlanta, Georgia, sold $300 million in notes to finance upgrades to its water infrastructure.
The city issued the notes in two series, which are likely to mature within the next year. The interest they bear is capped at 12% per year. The securities received a rating of P-1 from Moody’s and A-1/A-1+ from S&P Global Ratings.
Atlanta will use the proceeds from the sale of the notes to finance capital improvements to its water and sewer system.
Atlanta’s water infrastructure is aging, and the city has not funded improvements at the pace that watchdog groups say is necessary to keep its water infrastructure in good shape. The American Society of Civil Engineers, an industry group, found there is a $620 million annual gap between metropolitan Atlanta’s stormwater infrastructure needs and funding.
Atlanta might begin to close that gap by collecting delinquent water bills, which form the water and sewer system’s funding stream. As of June 2023, the city had $197.8 million in unpaid water bills outstanding, according to the city auditor’s office.
“Watershed Management has not consistently enforced water shutoffs for nonpayment since 2010,” according to the auditor’s report.
The city will also use the issuance proceeds to refund notes that it sold in 2021.
The notes are limited obligations of the city of Atlanta, secured by water and sewer system revenue.
Wells Fargo Bank, NA, and TD Securities (USA) LLC were designated as dealers for the notes. Hilltop Securities Inc and Grant & Associates, LLC acted as financial advisors.