DALLAS — Chandler, Ariz., will price $110 million of excise tax revenue debt for its water and wastewater system in a competitive deal Tuesday, Oct. 29.
With final maturity in 2033, the tax-exempt bonds carry triple-A ratings from Standard & Poor's and Fitch Ratings, and Aa1 from Moody's Investors Service.
Piper Jaffray & Co. serves as financial advisor on the deal, with Gust Rosenfeld as bond counsel.
With a population of 239,538, Chandler is one of the largest cities in Maricopa County, which Phoenix serves as the county seat.
The major economic drivers are government, manufacturing, financial services, commercial activities, high technology and tourism. Intel, the largest employer in the city is building a $5 billion factory in the city that is expected to employ 1,000 people.
Moody's analyst Andrea Unsworth cited "the broad nature of the special tax pledge representing a robust and well diversified economic base, despite some volatility in recent years, very healthy coverage of peak debt service, and sound legal provisions."
The stable outlook reflects Moody's expectation that management will continue to maintain favorable financial operations and healthy coverage of all parity debt obligations.
Standard & Poor's analyst Matthew T. Reining cited Chandler's ratio of pledged revenues to maximum annual debt service at a factor of 10.3, which he called strong.
"The stable outlook reflects our anticipation that debt service coverage by pledged revenues will remain strong," Reining wrote. "We do not expect to change the rating within the next two years."
Chandler's primary assessed valuation, upon which property taxes are based, fell 3.9% in the current fiscal year from 2012, based primarily on a decline in state shared revenues, according analysts. Secondary assessed value, which is used to assess debt-service taxes, declined 3.5% in the same time period. Arizona law limits general obligation bond indebtedness to 6% of the secondary assessed valuation.
The city has $233.7 million of outstanding debt, excluding water and sewer bonds, with the largest issue of $230.9 million issued in 2009. Water and wastewater debt totals $341.2 million.