DALLAS — Retail and institutional investors alike were attracted to the Oklahoma Water Resources Board’s negotiated $142.9 million revenue bond sale on Tuesday and Wednesday.
The proceeds will provide additional resources for the state revolving fund that helps finance local drinking water and clean-water projects.
The debt will provide $85 million of proceeds for the clean water revolving fund and $57.9 million for the clean water loan fund.
The proceeds will be used to replenish the two funds for loans already made, for new loans for new projects over the next 12 to 36 months, and to provide state matching funds for federal water programs.
The water board’s revolving fund bonds are rated triple-A by all three major credit agencies.
The $85 million of Series 2011A clean-water bonds offered yields ranging from 0.66% for maturities in 2013 to 4.42% for debt maturing in 2031.
The $57.9 million of Series 2011B drinking-water bonds brought 0.66% on debt maturing in 2013 to 4.88% on the final maturities in 2042.
The bonds can be called in April 2021.
Joe Freeman, chief of the board’s financial assistance division, said the strong interest in the revenue bonds by the institutional and retail markets showed they were hungry for high-quality debt.
“We had great interest from the retail investors on Tuesday, and even better interest from the institutional side,” Freeman said.
“We had a great strategy for structuring for this deal, and it worked out very well,” he added.
Bank of America Merrill Lynch is lead underwriter. BOSC Inc. and Wells Nelson & Associates Inc. are co-managers.
McCall Parkhurst & Horton LLC is bond counsel. First Southwest Co. is financial adviser to the board.
The triple-A ratings meant lower interest costs, Freeman said, which benefits the local governments borrowing funds through the two revolving loan programs.
“We are able to provide loans to Oklahoma communities and rural water districts at interest rates that are lower than from other funding sources,” he said. “This enables our borrowers to keep their water and sewer rates lower.”
Borrowers typically are charged 70% of the prevailing market rate on drinking water fund loans, and 60% of the market rate on clean water fund loans.
The program currently has 263 outstanding loans totaling $742 million. Since the program began in 1985, the board has authorized 694 loans totaling more than $2.3 billion.
Loans to the five largest borrowers — the cities of Bartlesville, Lawton, Tulsa, Muskogee, and Duncan — constitute one-fourth of the total pool, but no single borrower accounts for more than 7% of the total loan portfolio.
Before the sale, the water resources board had $509 million of outstanding debt. The board has $111.7 million in three bond reserve funds and $77.4 million in other accounts.