The Metropolitan Water District (MWD) of Southern California issued $258 million in bonds to make infrastructure improvements.
The bonds mature between 2024 and 2053, with yields ranging from 2.48% to 3.65%. The securities received a rating of AAA from S&P Global Ratings and Aa1 from Moody’s Investors Service.
The rating is “supported by MWD’s ability to draw water supplies from the Colorado River, the State Water Project (SWP), stored water, and supplemental water transfers to keep supplies and regional demands in balance, even under adverse water supply conditions,” according to S&P.
The issuance comes as the MWD endeavors to meet enduring demand for water as California recovers from a historic drought worsened by climate change. Experts estimate that between 2020 and 2022 alone, the drought cost the state $3 billion and almost 20,000 jobs. Some specialists estimate that 2000-2021 was the region’s driest period in over one thousand years.
Last year, record levels of rainfall broke the dry spell, reducing pressure on the utility.
The MWD is the largest supplier of treated water in the United States. It services a swath of Southern California that includes 14 cities and parts of Los Angeles, San Diego, and Orange Counties.
The bonds will be backed by revenue from the utility, which generated $1.9 billion last year.
Siebert Williams Shank & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $293 million. The price reflected a premium of $35 million.