Philadelphia, Pennsylvania, issued $564.8 million in bonds to fund projects that will improve its drinking water and wastewater infrastructure.
The bonds mature between 2024 and 2053, yielding between 3.18% and 4.65%. They received a rating of A+ from Fitch Ratings, A1 from Moody’s Investors Service, and A+ from S&P Global Ratings.
The rating reflects the Philadelphia Water Department’s “satisfactory current financial position,” as well as its “sizeable consent order and the system’s aging infrastructure, both of which require significant ongoing capital investment,” according to Moody’s.
Cities across the United States are gearing up to replace aging water infrastructure. Philadelphia aims to solve part of that problem with a 25-year, $2.5 billion Water Revitalization Plan. The plan identifies 400 projects focused on improving existing drinking water facilities and constructing new ones. Initial construction on 10 “key projects” will begin in 2025.
The issuance follows a $500 million federal investment in Philadelphia’s water infrastructure. Earlier this year, the White House announced that the city would receive a $160 million grant from the Infrastructure Investment and Jobs Act to upgrade water facilities and replace aging water infrastructure. The city also received a $340 million loan to upgrade its water system from the Environmental Protection Agency.
The bond proceeds will also fund refund bonds issued by the city in 2019 and 2020.
The Philadelphia Water Department services more than 500,000 water and wastewater accounts in the city and its surrounding suburbs. The bonds are special obligations of the city, payable by revenue from water projects.
Goldman Sachs & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $600 million. The price reflected a premium of $37 million and a discount of $2 million.