Charlotte, North Carolina, issued $543 million in bonds to finance improvements to its water and sewer system.
The bonds mature between 2025 and 2054, yielding between 3.02% and 3.92%. They pay interest at 5%. The securities received a rating of Aaa from Moody’s Investors Service and AAA from S&P Global Ratings.
“The Aaa rating reflects the essential service provided by the system to a large and expanding service area with healthy financial metrics,” Moody’s analysts wrote.
Charlotte will use the bond proceeds to upgrade its water infrastructure, including by purchasing and installing new equipment.
Those improvements will be bolstered by federal funding. In February, North Carolina Senator Thom Tillis announced that the state would receive $361 million from Washington for drinking water projects. The financial injection is part of the Bipartisan Infrastructure Law, which passed in November 2021 and has allocated more than $500 million in North Carolina water infrastructure since its passage.
The bonds are special obligations of the city, payable by net revenue from its water and sewer system. The system recorded $308.6 million in net income available for debt service last fiscal year.
BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for more than $600 million. The price reflected a premium of almost $60 million and a discount of $2 million. DEC Associates, Inc acted as financial advisor.