HARTFORD — On August 8, the Metropolitan District expects to wrap up a very successful financing for $157 million general obligation, 20-year bond issue at an all-in cost of 2.46 percent. The bonds were priced the week of July 22. MDC’s decisive business strategy to enter the market at the current time resulted in locking in interest rates that are among lowest in many years. The financing was further enhanced by the improvement in the fiscal health of the City of Hartford as well as a decrease in the supply of high quality Connecticut municipal bonds. In contrast to the 2018 $110 million general obligation bond issue, the MDC’s significantly reduced its “spread” or margin over the municipal bond industry’s AAA MMD cost curve from 87 basis points to 61 basis points.
In addition, as part of the financing, the District issued $81 million in 2019 Refunding bonds in order to retire the 2010 Series A Series B bonds, realizing $13.5 million in present value savings in the process.
The bond sales syndicate included four firms, and was led by Senior Manager, Raymond James. During a highly successful pre-sale order period, the syndicate received $670 million in total orders, representing $4.2 times oversubscribed from more than 42 unique institutional investors.
Both S&P Global Ratings and Moody’s Investors Service confirmed their ratings/outlooks of MDC (AA/ Stable and Aa3/Stable, respectively) as part of the bond issuance process.
In its July 17 report, S&P Global Ratings Group indicated that “the continued movement toward the credit stability of Hartford lessens the risk that MDC’s finances will deteriorate due the city’s recent challenges”. In terms of the State’s response to the situation, S&P further asserted that the strong commitment [by the state] “illustrates the strong commitment of the state and its municipalities to support the District and its overall mission.”
Additionally, in a meeting of the State of Connecticut Bond Commission last month, the MDC received grant funding for two of three crucial projects (known as Contracts 4 and 5) related to the MDC’s massive Clean Water Project. These grants will help facilitate completion of the South Hartford Conveyance and Storage Tunnel project, a critical step in MDC meeting the governmental orders from CT DEEP and U.S. EPA to upgrade its sewer system.
MDC is likewise expecting that Contract 3, also critical to completing the SHCST, will receive similar state grant funding in the coming months so that the project will continue progress in accordance with the MDC’s Long Term Control Plan, which was submitted to CT DEEP in December 2018 and is awaiting approval. These expected state grants are critical to the affordability of the CWP for the remaining dollars needed to complete the Consent Order issued by the State of CT in 2006.
Over the past five years, the MDC has spent over $750 million to eliminate 550 million of the 1 billion gallons of combined sewer and storm water overflows mandated to be removed by the CT DEEP and U.S. EPA. MDC’s proposed Integrated LTCP Plan submitted to the State of CT would continue to comply with the reduction of combined storm water overflows in the Hartford region while also enabling MDC to address the critical need to invest billions of dollars in an existing aging water and sewer infrastructure that is not part of the CWP. MDC, to date, has spent more than most similarly mid-sized wastewater utilities in the country under the State Consent Order.