The District of Columbia Water & Sewer Authority sold $350 million of taxable bonds to be repaid in 100 years, marking the first issuance of century bonds by a U.S. public utility.
The authority increased the deal by $50 million from its original $300 million offering, and moved the sale date from next week to today, said Mark Kim, DC Water’s chief financial officer. Orders were placed for about $1.1 billion, and buyers included insurance companies and pensions, he said.
Proceeds from the sale of the taxable revenue bonds with a final maturity of October 2114 will be used to build tunnels as part of a $2.6 billion project to fix sewer outflows in waterways, bond documents show. The deal priced to yield 4.81 percent as benchmark 30-year Treasuries (USGG30YR) yield 3.37 percent, according to data compiled by Bloomberg.
“The structure of this transaction offered a lot to the market,” Kim said in a telephone interview. “It was a very highly rated credit coming into this space in very favorable market conditions.”
The borrowing benefits from demand for long-term debt, which has earned 11 percent this year, compared with 5.9 percent for the broader $3.7 trillion municipal market, Bank of America Merrill Lynch data show. The bonds are rated Aa2, the third-highest investment grade by Moody’s Investors Service.
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