The Great Lakes Water Authority (GLWA) sold $215.7 million in bonds to finance capital improvements and refund previously issued securities.
The authority sold the bonds in two series. The Series 2023A bonds, consisting of $67.2 million, mature between 2025 and 2038, yielding between 3.34% and 4.02%. The Series 2023B bonds, consisting of $148.5 million, mature between 2026 and 2053, yielding between 3.34% and 4.6%. The securities received a rating of AA- from S&P Global Ratings, A+ from Fitch Ratings, and Aa3 from Moody’s Investors Service, which upgraded GLWA from A1.
“The senior lien water revenue rating was upgraded to Aa3 because the authority has established a track record of strong management and prudent long-term forecasting, solid operating performance, serviceable debt service coverage and robust liquidity,” Moody’s analysts wrote.
The issuance comes as the water utility system adjusts to a period of declining demand. In its 2015 master plan, the utility found that its water treatment capacity was 60% greater than anticipated demand over the next 20 years. It has since begun a program to align capacity with demand.
The system’s capital improvement plan calls for almost $200 million in spending for the upcoming fiscal year. About two-third of bond proceeds will be used for capital improvements and one-third for refunding previously issued bonds.
GLWA is the regional water utility in Michigan. The bonds are payable by net revenues from the water utility system.
Siebert Williams Shank & Co, LLC served as lead underwriter on the issuance, purchasing the bonds for $230.5 million. The price reflected a premium of $15 million.