Bond Refunding Deal Saves Massachusetts Taxpayers $73.3 Million
Mass. Water Agency Leverages Outstanding Bond Rating, Favorable Borrowing Environment
Capitalizing on its AAA bond rating in a low interest rate environment, the Massachusetts Water Pollution Abatement Trust (MWPAT) today announced that a bond refinancing deal it just completed has saved Massachusetts taxpayers $73.3 million.
“These are substantial savings that will allow us to fund even more essential water infrastructure projects across the Commonwealth,” said Treasurer Steven Grossman, who chairs the MWPAT Board. “The MWPAT has the highest bond rating of any state agency in the Commonwealth, and these kinds of outstanding cost-saving results demonstrate the significance of that distinction. I want to express my appreciation to Executive Director Sue Perez and her team for their leadership and professionalism.”
The MWPAT sold the State Revolving Fund Refunding Bonds, Series 2014, as tax-exempt fixed-rate bonds structured with maturities in years 2015-2028. Individual investors had the first opportunity to buy the bonds during a special retail order period yesterday, followed by institutional investors later in the day. The total interest cost of the deal was 2.13 percent.
“This deal is a testament to the sophistication and the focus of the staff of the Massachusetts Water Pollution Abatement Trust,” said Scott Jordan, Undersecretary for the Executive Office of Administration and Finance, and trustee of the MWPAT. “I would like to congratulate the team at MWPAT and DEP on their execution of a transaction that will both save Massachusetts taxpayers’ dollars and provide additional resources to improve water quality throughout the Commonwealth.”
“MWPAT is a top-notch operation, which consistently looks to reduce the costs of water and sewer infrastructure investments for ratepayers and taxpayers of the Commonwealth,” said Commissioner David W. Cash of the Massachusetts Department of Environmental Protection. “We are proud to be a partner of the Trust and congratulate the team for a prudent decision to take advantage of low interest rates in the Bond market.”
The bond sale proceeds will be used to refinance outstanding MWPAT bonds and take advantage of current market rates to generate debt service savings. The bonds were sold via a negotiated sale through MWPAT’s underwriting syndicate senior-managed by Bank of America Merrill Lynch.
The MWPAT lends financial assistance to the Commonwealth by providing subsidized loans to cities and towns for clean water and drinking water infrastructure development. Since its establishment in 1989, the Trust has loaned $6 billion to improve and maintain the quality of water in the Commonwealth. An estimated 97% of Massachusetts’ citizens have benefited from the MWPAT’s financial assistance.