The New York City Municipal Water Finance Authority plans to sell $400 million of second-resolution, fixed-rate, tax-exempt new-money bonds Tuesday, after a one-day retail period.
The issuance will consist of $350 million of fiscal 2012 Series CC bonds and $50 million of fiscal 2012 Series DD bonds, according to a preliminary official statement.
Ramirez & Co. is book-running senior manager for the underwriting syndicate. Barclays Capital, Jefferies & Co., Morgan Keegan & Co., and M.R. Beal & Co. are co-senior managers. Lamont Financial Services Corp., Drexel Hamilton LLC and Acacia Financial Group Inc. are financial advisors to the authority for the bond sale.
Orrick, Herrington & Sutcliffe LLP is bond counsel. Nixon Peabody LLP is representing the underwriters.
Fitch Ratings and Standard & Poor’s assign AA-plus ratings to the bonds and Moody’s Investors Service rates them Aa2.
The MWFA, created in 1985, finances the capital needs of New York City’s water and sewer system, which the city’s Department of Environmental Protection operates. The city’s water board sets water and sewer rates for revenues to cover the system’s operating and financing costs.
The authority provides more than 1 billion gallons of water to nine million customers. Of these customers, 8.2 million are in New York City and the rest are in Westchester, Putnam, Orange and Ulster counties, the agency said.
“The ratings reflect strong bondholder protections provided by the authority’s legal structure; healthy debt-service coverage provided by gross revenues and enhanced by independent rate-setting ability; the essential nature of New York City’s water and sewer system, and the monopoly the city and the authority have in providing that service,” Moody’s said in November, when the MWFA sold $450 million of revenue bonds, fiscal 2012 Series BB.
Challenges, according to Moody’s, include the system’s size, age and density of the population it serves along with rising debt and continued need for large rate increases.