The Massachusetts Water Resources Authority today will sell $1.16 billion of multi-modal subordinated revenue refunding debt to help it exit the auction-rate market and address variable-rate debt insured by Financial Guaranty Insurance Co. and Ambac Assurance Corp.

The transaction will convert $407 million of auction-rate securities into variable-rate demand bonds, with the remaining $760 million of floating-rate debt currently insured by FGIC and Ambac to instead carry enhancement through standby purchase agreements. The purpose of the refunding and conversion transaction is to reign in escalating debt service costs, according to Rachel Madden, the MWRA's chief financial officer.

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