The Massachusetts Water Pollution Abatement Trust realized record-low borrowing costs for two bond sales totaling $202.3 million, state Treasurer Steven Grossman said.
On May 8, the trust sold two series of state revolving fund bonds for water infrastructure projects by competitive bid. The trust received eight bids for the tax-exempt series and 11 bids for the taxable series, resulting in an all-in financing rate of 2.952%, according to Grossman.
Massachusetts Water is the commonwealth's only statewide municipal issuer with triple-A ratings from Fitch Ratings, Moody's Investors Service and Standard & Poor's.
The trust sold $185.6 million of tax-exempt bonds maturing through 2043 to Bank of America Merrill Lynch, which submitted the lowest of the eight bids at a true interest cost of 2.91%. The bonds will mature annually over 30 years and provide subsidized funding for $324 million in water infrastructure projects to 78 communities.
According to Grossman, the subsidized rate of 2% to the communities saved the average borrower an estimated $355,000 in debt serviced over the life of the loan, based on the average loan of $3.2 million financed through this bond sale.
Massachusetts Water also sold $16.6 million of taxable bonds maturing 2014 through 2016 to Morgan Stanley, which submitted the lowest total interest cost of 11 bidders of 0.405%. The taxable proceeds, along with financial assistance from the commonwealth, will fund zero percent loans to the Community Septic Management Program.
The trust began in 1989 and was amended in 1998 to encompass the provisions of Title XIV of the Federal Safe Drinking Water Act. It has provided roughly $6 billion in loans to nearly 300 borrowers.