ATLANTA -The market on Wednesday will have the chance to pick up some natural triple-A rated debt when the Gwinnett County Water and Sewerage Authority in Georgia issues $190 million of revenue bonds.
This is a rare opportunity for investors interested in this kind of debt as the Gwinnett authority is a relatively infrequent issuer. The last time it was in the market was 2006 when it issued about $121 million of refunding bonds, according to Thomson Reuters data.
The Series 2008 bonds will be sold competitively with Public Financial Management Inc. as the financial adviser and King & SpaldingLLP as bond counsel.
The bonds have maturities from 2013 through 2028.
Peter Kessenich, a managing director with PFM, said the deal is pretty straightforward.
"This is an all new-money deal," Kessenich said. "The bonds have the natural triple-A rating by virtue of the county providing its full faith and credit to back the bonds."
Maria Woods,the acting director of the authority, said the Series 2008 bonds would bear interest at a rate not exceeding 5.25% and they would have a maximum debt service that would not exceed $17.4 million a year.
Proceeds will be used to make improvements to two water reclamation facilities, which are called Yellow River and Crooked Creek.
Lynn Smarr, the director for water resources for the county, said proceeds will also be used to facilitate the county shifting most of its sewage treatment to a state-of-the-art facility. Gwinnett had been sending wastewater to a water reclamation facility owned by the city of Buford.
"The improvements being made are part of our master plan to consolidate facilities and improve the efficiency and environmental impact of our operations," Smarr said. "The county is shifting most of its sewage treatment to the state-of-the-art F. Wayne Hill Water Reclamation Facility near the Mall of Georgia. Most reclaimed water will be returned to the Chattahoochee River and Lake Lanier."
Proceeds will also be used to build a new pipeline for drinking water from the Shoal Creek filter plant and to build a reuse water pipeline to Lake Lanier, which supplies the system with water. Upgrades at four pump stations and the construction of new force mains to provide sewer service in some southern parts of the county will also be funded with the proceeds from this week's sale.
In rating the bonds, Fitch Ratings analyst Christopher Hessenthaler said in his report that Gwinnett's high credit fundamentals include strong financial management demonstrated by consistently large fund balances, prudent management policies, good economic growth and diversity, and substantial pay-as-you-go financing of capital projects leading to a low debt burden.
The county has a five-year capital plan in place, totaling $970 million that runs from 2008 through 2013. As part of the plan, officials anticipate issuing $150 million of bonds next year and $100 million of bonds in 2011, according to Chad Teague, the county's budget director.
Gwinnett County's population ranks second in the state behind Fulton County. Growth in the county's population has fueled expansion of the county's economy.
Gwinnett is located north of Atlanta. While its finances remain strong, analysts have pointed out that the area's prolonged drought is impacting the county's revenue growth for its water and sewerage system. Still, its debt service coverage remains adequate, and previously adopted rate increases have ensured strong operating margins and a good level of liquidity, according to Hessenthaler.