The Colorado Water Resources and Power Development Authority will give investors a shot at its triple triple-A-rated credit next month in a competitive deal for $12.2 million of Series 2008A clean water revenue bonds.
All three rating agencies have awarded top marks to the upcoming bonds, whose proceeds will provide loans to fund wastewater treatment facilities for two local governments. The bonds are scheduled to sell May 6.
“The AAA- rating is based on the high levels of reserves from federal [state revolving fund] capitalization grants, which generate investment earnings that are used to subsidize local borrower loans, the primary source of security for the bonds,” Fitch Ratings analysts wrote. “In addition to generating interest earnings, the reserves also provide security to bondholders in the event loan repayments are insufficient to cover debt service on the bonds.”
The authority’s loan pool is diverse, with 79 participants, analysts noted.
“While the top 10 borrowers account for 36% of the portfolio, concentration of individual borrowers is currently limited to less than 5.4%,” Fitch analysts wrote. “In addition, overall credit quality is sound, with approximately 56% of all outstanding principal exhibiting investment grade characteristics. Underlying loan provisions are strong with the vast majority of all loan principal secured by water and/or wastewater pledges or general obligation pledges.”
