The New York City Municipal Water Finance Authority is set to launch its second issuance of the year, amounting to $450 million in fixed-rate second resolution bonds. The funds will be allocated towards system improvements and refunding. The retail order period is scheduled for Monday, followed by institutional pricing on Tuesday. According to Andrew Rothbaum, handling investor relations for the authority, the new money portion of the transaction will reimburse prior spending on various water and wastewater projects.
Barclays is serving as the senior manager, with Siebert Williams Shank as the joint senior manager. The bond counsel is comprised of Nixon Peabody and Hardwick, while Lamont Financial Services is overseeing municipal advisement. The authority currently maintains $33 billion in outstanding debt, with a previous issuance of $1.4 billion in March. Notably, the ratings from S&P Global Ratings, Moody’s Ratings, and Fitch Ratings have been affirmed at AA-plus, Aa1, and AA-plus, respectively, all with stable outlooks.
The New York City Municipal Water Authority enjoys a strong financial position, marked by a history of low leverage and protective measures for bondholders. The report emphasizes the system’s capacity to deliver a billion gallons of water daily to the city. With the backing of the New York City Department of Environmental Protection, the authority has a monopoly on water services and sewer services for a widespread population. The authority’s revenue stream has displayed resilience, despite fluctuations during the pandemic, owing to higher usage and effective rate management.
Looking ahead, the Water Board plans to incrementally raise rates over the next four years and forecasts a decline in water consumption annually from 2024 to 2028. Moody’s Aa1 rating acknowledges the system’s financial stability and prudent debt service management, offering investors access to a substantial revenue base. Fitch’s report highlights the authority’s improved leverage position, despite impending rent payments to New York City, which may impact leverage ratios in the coming years.
The authority’s capital improvement plan spans from 2024 to 2033, encompassing significant investments in sewer infrastructure, water pollution control, and water distribution. It projects issuing approximately $10.548 billion of new money bonds between 2024 and 2028. In response to the growing threat of cyberattacks on critical infrastructure, the authority collaborates with city, state, and federal entities to enhance cybersecurity measures and preparedness.
The latest bond issuance by the New York City Municipal Water Finance Authority reflects its commitment to enhancing water and wastewater infrastructure while maintaining financial stability and addressing future challenges. The authority’s proactive approach to cybersecurity and capital investment underscores its dedication to serving the water needs of New York City residents efficiently and securely.