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Florida City Issues $138 Million in Bonds

By Munichain News Desk

Cape Coral, Florida, issued $138 million in bonds to make improvements to its irrigation, water, and wastewater services.

The bonds mature between 2025 and 2054, yielding between 4.05% and 5.65%. They received an insured rating of AA from S&P Global Ratings and underlying rating of A2 from Moody’s Investors Service and A from Fitch Ratings.

“The A2 rating reflects the contractual obligation of the water and sewer system to cover any potential debt service deficiencies with net system revenues, which is subordinate to the payment of senior and ‘prior’ obligations,” Moody’s analysts wrote.

The bond proceeds will finance upgrades to water utility infrastructure in northwest Cape Coral, an area where most residents obtain drinking water from sell-supply well systems. 

These systems “pose potential threats to public health and the environment of the communities as these systems can only provide limited potable water treatment,” the official statement accompanying the sale of the bonds reads. Increasing water demand as a result of rising development in the city can also put pressure on the system and worsen ongoing environmental issues, according to the bond documents.

The bonds are special obligations of Cape Coral, payable by special assessments collected by the city. The bonds are also supported by a contractual pledge from the city’s water and sewer utilities to fund deficiencies in debt service with utility revenue.

Morgan Stanley & Co LLC served as lead underwriter on the issuance, purchasing the bonds for close to par.

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