Massachusetts Water Resources Authority


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October 16, 2000

MWRA Bond Rating Upgraded, Saves Money in Bond Deal

MWRA received two rating agency upgrades this week in advance of a $150 million bond sale to fund ongoing water and sewer projects. MWRA successfully conducted the fixed rate bond sale and saved an estimated $180,000 per year by using a concurrent interest rate swap to achieved the desired variable rate debt.

The Standard & Poor’s rating agency upgraded MWRA senior lien debt from A+ to AA, citing substantial completion of the Deer Island Tr atment Plant, continued progress in financing construction projects at lower-than-anticipated costs, and continued ongoing regulatory compliance.

Moody’s Investors Service upgraded MWRA’s rating from A1 to Aa3 based on the credit strength of the member communities, substantil reserves, and the local aid intercept provisions of the General Bond Resolution. Both Moody’s and Standard & Poors noted the need for future rate increases to support MWRA’s growing debt service requirements. The Fitch rating, which had been upgraded to AA- in June was unchanged.

"We are very pleased with the rating upgrades. They show the real financial strength that MWRA has developed over the past ten years by funding reserves, working to reduce operating costs, and exploring a variety of financing tools like today’s swap agreement to keep debt service costs down."

Some of the capital projects to be funded by this bond sale include the following projects:

MetroWest Water Supply Tunnel (17.6 mile deep rock tunnel from Southborough to Weston)
Walnut Hill Water Treatment Plant (new treatment facility to meet state and federal water quality standards on Marlborough-Southborough line).
Norumbega Covered Storage Facility (new water storage facility in Weston to prevent contamination and maintain system water pressure).
Multiple Combined Sewer Overflow Projects to reduce and eliminate wet weather discharges from sewers to local rivers and Boston Harbor.
Sewer interceptor and pump station projects to improve transport of wastewater to Deer Island, reduce groundwater infiltration and sewer overflows, and install lining in old sewers to extend their functional life.

Goldman, Sachs & Co. served as the MWRA’s lead bond underwriter. The $150 million borrowing, with final maturities in 2011 yielded a 5.03% all-in interest cost. Seven bidders provided bids on the fixed-to-floating rate swap with a high bid of 4.906% from Merrill, Lynch.