The Ohio Water Development Authority sold $200 million in bonds to finance loans to municipal water departments.
The bonds mature in 2054 and pay interest at a rate determined daily. They received a rating of Aaa/VMIG 1 from Moody’s Investors Service and AAA/A-1+ from S&P Global Ratings.
The authority will loan the bond proceeds to local water authorities as part of an Ohio financing mechanism called the Water Pollution Control Loan Fund.
“The Aaa rating reflects that the program will continue to maintain [a] high level of overcollateralization and favorable loan pool characteristics,” Moody’s analysts wrote.
The program, which contains more than 600 borrowers, aims to fund local water authorities in Ohio to reduce pollution in the state’s water. More than 95% of community water systems in the state meet health-based standards, according to the Ohio Environmental Protection Agency.
The program is on strong financial footing, according to Moody’s. The ratings agency noted that no borrower makes up more than 15% of the total and that the program has a default tolerance of 43%.
The bonds are special obligations of the Ohio Water Development Authority, secured by loan repayments and interest earnings.
TD Securities (USA) LLC served as underwriter on the issuance, purchasing the bonds for close to par. PFM Financial Advisors LLC acted as municipal advisor.