The Maryland Water Quality Financing Administration plans to sell $48.6 million of revolving loan fund revenue bonds in a negotiated sale on April 9.
Fitch Ratings, Standard & Poor’s, and Moody’s Investors Service all assign triple-A ratings with stable outlooks to the debt.
With this issue the MWQFA establishes a new indenture for its clean water and drinking water state revolving fund, Fitch said. Proceeds will fund loans to local wastewater facilities throughout the state and the administration plans to issue all future wastewater and drinking water bonds under the 2008 indenture.
“The AAA rating and stable outlook on the 2008 indenture SRF bonds reflect the strong security provided by a high-quality loan portfolio and the significant default tolerance due to excess loan repayments, which secure the bonds,” Fitch said.
Additional credit enhancement to the bonds includes a state intercept to cover any potential borrower defaults of general obligation-backed loans. The intercept has never been utilized, as the MWQFA has never experienced borrower defaults or delinquencies since the inception of the clean water SRF program in 1988.
The pledged loan pool is made up of 56 borrowers, and about 86% of the borrowers are estimated to exhibit investment-grade credit quality, according to Fitch. Baltimore — which has an A-plus GO from the agency — is the largest borrower, representing 19% of the total pledged loan pool.