The Metropolitan St. Louis Sewer District (MSD) was assigned a AAA rating from Standard & Poor’s, an AA+ from Fitch, and an Aa1 from Moody's for an upcoming revenue bond issue of approximately $240 million. Approximately $150 million of the bond issue will be used to finance upcoming wastewater projects that are part of MSD Project Clear, an initiative to improve water quality and address wastewater concerns through the St. Louis region. The remaining amount – approximately $90 million – will be used to refinance previously issued bonds, saving MSD customers approximately $9 million in financing costs. The bonds will be issued without a Debt Service Reserve Fund, which will result in an additional savings that can be used towards projects.
Credit ratings express the rating agencies’ opinions about the ability and willingness of an issuer – such as a corporation, state, or city government – to meet its financial obligations in full and on time. Credit ratings are also used to help determine the interest rates at which the bonds are able to be sold. Generally, higher rated organizations pay a lower rate of interest than issuers with lower ratings. Thus, the higher the rating, the more rate payers save in interest cost.
The upcoming bond issue– known as Series 2015B – is scheduled to sell via negotiated sale the week of November 30 and is part of a $945 million bond authorization approved by 85% of voters in June 2012.
The bonds are secured by revenues that are collected from MSD customers to pay for wastewater services. All three agencies affirmed their ratings on MSD’s outstanding wastewater revenue bonds and provided a stable outlook.
In assigning their ratings, the three agencies noted as strengths:
• Strong and diverse service area economy covering the City of St. Louis and St. Louis County;
• Large, diversified customer base;
• Moderate rates not subject to outside regulation;
• Strong financial operations, with strong pro forma debt service coverage and good liquidity;
• Experienced management staff;
• Strong management policies and planning capabilities;
•Bonding capacity requires voter approval and the board maintains strong voter confidence, as evidenced by the 85% approval rate of the recent $945 million authorization in June 2012.
MSD has compiled a list of more than 100 projects which will be financed with the proceeds of the Series 2015B bonds, including:
o Coldwater Sanitary Relief Section B, C & D Wet Weather Storage Facility Tank C @ $22 million.
o Upper Maline Trunk Sanitary Relief Phase IV Section A @ $7.5 million.
o Caulks Creek Forcemain (River Valley Road to L-52) @ $6.6 million.
About MSD Project Clear
• MSD Project Clear is the Metropolitan St. Louis Sewer District’s initiative to improve water quality and alleviate many wastewater concerns in the St. Louis region. MSD Project Clear will invest billions of dollars over a generation in planning, designing, and building community rainscaping and system improvements, along with an ambitious program of maintenance and repair and the disconnection of some residential downspouts in parts of St. Louis County’s separate sewer area from the wastewater sewer line. This work is part of an agreement between MSD and the United States Environmental Protection Agency.
• The St. Louis region’s success with MSD Project Clear will only be possible through strong partnerships and clear communications with the public.
• To learn more about the MSD agreement with EPA, please visitwww.stlmsd.com/aboutmsd/organization/consentdecree. For more information on MSD Project Clear, visit ProjectClearSTL.org or follow us on Twitter @ProjectClearSTL.
About the Metropolitan St. Louis Sewer District (MSD)
• Created in 1954, the Metropolitan St. Louis Sewer District (MSD) works every day to protect the public’s health and the natural environment through effective wastewater and stormwater management strategies.
• MSD is responsible for the public sewer system that homes and businesses connect to through lateral lines. Through a labyrinth of connected sewers, wastewater is transported to one of seven sewer treatment plants – nearly 7,000 miles of sewers in all. That is like going from St. Louis to New York City and back three times! Individual property owners are responsible for another important part of the system, the sewer lateral that connects a home’s plumbing to the public sewer in the street.