Moody’s Investors Bond Rate Increase
The Mohawk Valley Water Authority (MVWA) has received a bond rating increase from Moody’s Investors Service for its current issue of revenue bonds expected to close on November 5, 2020. The upgrade moves the MVWA from a Moody’s rating of A1 up one notch to Aa3. This upgrade puts the MVWA’s rating into the double A category on the Moody’s scale. Standard and Poor’s maintained its rating of A+ with a stable outlook due predominantly to the Covid 19 pandemic and their decision to place the entire water and sewer sectors under a negative outlook.
After four years of no borrowing, the MVWA is set to close on its 2020 Bond Series which includes $15.2 million for several capital improvement projects during the next two to three years, and $10.9 million to refinance bonds that were issued on 2012 at higher interest rates. The refinancing of the 2012 bonds will produce a total savings of $571,073 over the remaining life of that debt. The average rate for all bonds being issued results in a blended interest rate of 2.19% interest. The bonds carry a “green bond” rating because of various environmental benefits associated with the improvement projects.
Among the reasons cited for the bond rating upgrade, Moody’s stated the MVWA “benefits from a strong financial position marked by conservative budgeting.” Other supporting factors included ample system capacity and expected near-term growth in the service area and customer base.
Included in the borrowing is $7 million in matching funds to be combined with a $3 million State grant to begin the $10 million second phase of construction of a new 54-inch diameter raw water transmission pipe that will transport water approximately three miles from the Hinckley Dam to the MVWA’s Water Treatment Plant (WTP.) The new line will replace a 24-inch diameter pipe that was installed in 1905.
Select here to view Moody's Investors Service Credit Opinion.