The Indiana Finance Authority issued $148.7 million in bonds to fund clean water projects in the state.
The bonds mature between 2030 and 2044, yielding between 3,07% and 4.06%. They pay interest at 5%. The securities received a rating of AAA from Fitch Ratings, AAA from S&P Global Ratings, and Aaa from Moody’s Investors Service, which assigned a stable outlook.
“The stable outlook is based on our expectation that cash flow projections will consistently demonstrate debt service coverage ratios and default tolerance levels that align with the assigned rating,” Moody’s analysts wrote.
The bonds will finance loans for clean drinking water and wastewater initiatives in Indiana municipalities. Bond proceeds are complemented by federal grants and a state matching requirement.
Indiana has the most polluted waterways of any state, according to a 2022 report by the Environmental Integrity Project, a nonprofit which advocates for environmental laws. More than 24,000 miles of rivers and streams in Indiana are too polluted for recreation or aquatic life. That far exceeds Oregon, the state with the next most polluted waterways, where almost 18,000 miles of rivers and streams are impaired.
Farm runoff is a major driver of Indiana’s water pollution. Rainwater and irrigation runoff can sweep up contaminants such as bacteria, chemicals, and manure, depositing them in rivers and streams. In a state such as Indiana, where 58% of land area is dedicated to agriculture, this problem can be particularly acute.
The bonds will fund local programs focused on reigning in water pollution. The securities are limited obligations of the authority, payable by loan repayments from borrowing municipalities.
RBC Capital Markets, LLC served as lead underwriter on the issuance, purchasing the bonds for $165 million. The price reflected a premium of almost $17 million.