The South Dakota Conservancy District is preparing to enter the market this month with $40 million in state revolving fund program bonds to finance loans for local wastewater and drinking water projects. Proceeds will also go toward matching state funds for the SRF program.

The state match bonds are secured by loan interest repayments from borrowers and interest earnings, while the loan bonds are secured by loan principal repayments from borrowers and the interest and earnings not needed for debt service.

Administered by the state Board of Water and Natural Resources, the district will include a total of 115 borrowers and carry $406.3 million in loan principal outstanding after the upcoming sale. Sioux Falls is by far the district’s largest borrower, with 37.3% of the fund.

In assigning the bonds an Aaa/VMIG-1 rating, Moody’s Investors Service noted that the district has a strong default tolerance. Moody’s also estimated that 62% of the program’s borrowers have credit ratings of Aa3 or above.

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