King County, Washington, issued almost $130 million in bonds to make improvements to its sewer system.
The bonds mature between 2024 and 2047, yielding between 2.55% and 4.07%. They received a rating of Aa1 from Moody’s Investors Service and AA+ from S&P Global Ratings.
The rating reflects “the county’s large service territory in the Puget Sound region that includes the City of Seattle and the City of Bellevue,” according to Moody’s.
The issuance comes as the county raises that pace of rate increases for residential customers and equivalents. This year, the county raised sewer rates by 5.75%, and it plans to do so again at that rate each year through 2026. From 2027-2029, the county projects to raise rates by 6%. (Last year, the county raised sewer rates by 4%.) By 2029, the county projects the system’s monthly cost to residents to be $74.47, compared to $52.11 this year.
The county has collected more revenue from its sewer system after increasing sewer rates. Last year, the system generated $567 million in revenue, compared to $510 million in 2018. The county projects that the system’s revenue will exceed $1 billion in 2032.
The bonds are limited obligations of the county, backed by sewer system revenue. The county has $3.55 billion in outstanding debt.
Jefferies LLC served as underwriter on the issuance, purchasing the bonds for $138 million. The price reflected a premium of $8 million.