Portland, Oregon, sold $153.6 million in bonds to refund previously issued securities.
The bonds mature between 2025 and 2039, yielding between 2.83% and 3.18%. They pay interest at 5%. The securities received a rating of Aa2 from Moody’s Investors Service and AA from S&P Global Ratings.
“The rating is anchored by our view of Portland’s plentiful water supply and storage, comprehensive financial policies, conservative forecasting, and well-defined rate plans,” S&P analysts wrote.
Portland is planning major upgrades to its water system in the coming years. Its five-year capital plan, published in March 2023, calls for $1.75 billion in spending. That sum is over 50% more than the $1.14 billion in total operating revenue that the water system generated in the five years between fiscal year 2019 and FY 2023, according to the official statement accompanying the sale of the bonds.
S&P analysts wrote that “the water system’s financial metrics should remain supportive of the current rating level despite the rapid escalation in planned capital spending during the next decade.”
The city will use the issuance proceeds to refund bonds that it sold in 2013 and 2014.
The bonds are special obligations of Portland, secured by a second lien on the net revenue from the city’s water system.
Wells Fargo Bank, NA, served as lead underwriter on the issuance, purchasing the bonds for $172.4 million. The price reflected a premium of $19 million. PFM Financial Advisors LLC acted as municipal advisor.