Published: Oct 30, 2016 | 08:00 AM

Excellent IRWD Credit Ratings Help Keep Customer Rates Low

Irvine Ranch Water District is proud to announce that both Standard & Poors and Fitch credit rating agencies have assigned AAA ratings to the September issuance of IRWD’s Certificate of Participation (COP) and October General Obligation (GO) bond debt issues.

“This rating reflects the strong financial strength of the District,” said Mary Aileen Matheis, president of the IRWD Board of Directors. “The excellent AAA credit ratings resulted in low interest rates on debt which help us keep our customer rates among the lowest in the county.”

The COPs and GO debt issues were the first new money bonds issued by IRWD since December 2010 and will provide reimbursement for capital projects funded by the District in recent years. Each of the new credit rating reports pointed to key District strengths including its water supply reliability, strong operational and financial management and policies, extremely strong debt service coverage projections and liquidity and above average service area demographics.

On August 16^th, pricing of District’s 2016 COPs issue was completed with investors showing strong demand for the District’s AAA-rated debt. The issue closed on September 1^st with bond proceeds of approximately $148.5 million, including $100.0 million in new money proceeds for reimbursement of capital infrastructure expenditures, and $48.5 million for an advance refunding of a portion of the District’s 2010 COPs issue. The all-in fixed interest rate for the issue was 2.90%, including 3.16% for new money debt and 2.05% for the shorter-term refunding bonds. The refunding portion of the bond issue will lower the interest rate currently being paid on the 2010 COPs issue and provide an interest savings to the District of approximately $6.2 million. The largest investors in the new COPs issue included Merrill Lynch, UBS Asset Management, Vanguard, Wells Fargo and Gannett Welsh.

On September 28^th, pricing of District’s 2016 GO bond issue was completed with investors again showing strong demand. The bond issue closed on October 12^th with proceeds of approximately $130.5 million for reimbursement of capital infrastructure expenditures. The all-in fixed rate for the issue was 3.32%. The issue attracted a significant number of retail investors who purchased many of the shorter-term maturity bonds. The largest institutional investors included Blackrock, State Farm Insurance, Vanguard, Northern Trust and First Republic Bank.

Tax-exempt interest rates have recently been near historic lows providing an opportunity to lock in these low rates for the long-term with fixed rate debt issuance.  

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Background: IRWD finances the facilities it needs to provide water and sewer service to our customers by issuing general Certificates of Participation (COPs) and General Obligation (GO) bonds, much like you finance your home with a mortgage from the bank. Bonds issued by IRWD are typically used to fund basic water and wastewater infrastructure – which includes projects like reservoirs, ground water wells, water pipelines, water pump stations, sewage lift stations, sewer treatment and disposal and sewage collection pipelines. IRWD’s infrastructure serves about one fifth of Orange County and includes more than 1,500 miles of drinking water pipelines, more than 500 miles of recycled water pipelines, more than 1200 miles of sewage pipes, 36 reservoirs, 26 wells and four water treatment plants.

Credit agency ratings reflects the independent opinion regarding the credit worthiness of the issuer to make timely principal and interest payments on its debt. Credit rating agencies assign ratings to a particular debt issue and to all the outstanding debt issued under the same security or credit pledge.