DALLAS – The Oklahoma Water Resources Board will issue $115 million of revenue bonds for its revolving loan program.
The bonds are expected to price Dec. 1 through senior manager Bank of America Merrill Lynch. Bosc Inc., J.P. Morgan and Morgan Stanley are co-managers. First Southwest Co. is financial advisor, with McCall, Parkhurst & Horton providing bond counsel.
With serial maturities from 2017 through 2040, the bonds carry triple-A ratings from Moody's Investors Service and Fitch Ratings with stable outlooks.
Under Fitch's cash flow modeling, the board's clean water and drinking water state revolving funds loan pool can continue to pay bond debt service even with loan defaults in excess of Fitch's triple-A stress hurdle, analysts noted.
"Approximately 72% of OWRB's combined pool consists of unrated entities, which Fitch conservatively assumes to be of speculative-grade credit quality in its analysis," Fitch analyst Major Parkhurst said.
Moody's said its top rating is primarily based on cash flow projections "which demonstrate the program's ability to withstand a default over 48% of the pledged loan portfolio over the life of the bonds."
With pledged revenue coverage of 140%, the bonds are cross-collateralized with investments held under the trust agreement.
With 147 borrowers in the pool, the top five, accounting for 30%, are Tulsa Metropolitan Utility Authority at 11.7%, Moore Public Works Authority at 5.3%, Bartlesville Municipal Authority at 4.8%, Broken Arrow Municipal Authority at 4.5%, and Oklahoma City Water Utilities Trust at 4.1%.
The board is operating under the guidelines of the 2060 Advisory Council, an appointed panel charged with studying and recommending appropriate water conservation practices, incentives and educational programs to improve efficiency of statewide water usage for the future.
"To meet the ultimate goal of water for 2060 will require effort and participation from all water users, whether changing our daily behaviors and decisions at home to new innovations and practices for crop irrigation, energy production and industry," said J.D. Strong, Oklahoma Water Resources Board executive director and Water for 2060 advisory council chairman. "We must never forget that water conservation will be key to meeting Oklahoma's long-term water needs because it remains the cheapest and quickest way to preserve Oklahoma's water resources for future generations."
