The Northern Kentucky Water District reported Monday that ratepayers should expect to save money by receiving a record low interest rate on the utility's borrowing that will be used to improve local infrastructure.
Lexington-based RSA Advisors, LLC served as the municipal adviser on the $25 million Northern Kentucky Water District Revenue Bond Anticipation Notes, Series 2021A rated MIG 1 by Moody's Investor Services.
The bonds received an interest rate of 0.375%.
"This record low interest rate should save the rate payer a considerable amount of money in interest expense over the next two years," said Lindsey Rechtin, the Water District's vice president of finance and support services. "The district is very proud to have received an improvement to our short-term credit rating to the highest rating possible and believe that it accurately reflects the hard work and dedication of the Board and management."
Government agencies and municipalities use Bond Anticipation Notes - also known as BANs - to manage cash flow and for temporary short-term financing.
"The low interest rate is a reflection of the district's strong credit rating," said RSA Managing Director Joe Lakofka. "This is another example of how RSA works closely with government and public service agencies to manage their finances and save ratepayers money."
The District will use the BAN to fund infrastructure projects that include:
- A new meter reading system.
- Plant improvements including enhanced residuals handling.
- Sedimentation basin and chemical improvements.
- Improvements to the water system through the annual water main replacements program.
"The funds will be spent to fund necessary projects that will help the District maintain existing infrastructure, as well as provide funds that are expected to provide enhanced dependability and functionality through the new meter reading system," said Ron Lovan, the district's president/CEO. "Our mission is to provide our customers a safe, clean, and sufficient water supply through a reliable system that meets all State and Federal standards, while delivering great value at a reasonable cost. This bond issuance is necessary for the District to support its mission."
Moody's upgraded the district's credit rating from Aa3 to Aa2 in late 2019. More recently, in the first quarter 2021, the district received a upgrade to is Municipal Investment Grade (MIG) rating on the BAN from MIG-2 to a MIG-1, the highest rating possible and a reflection of the District's strong long-term credit quality.
"The district has been working diligently over the past several years to strategically manage our debt portfolio, coupled with a long-term rate management and project management mindset, to place the District in a strong financial position," Rechtin said.
-Staff report
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March 23, 2021 at 05:01AM
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NKY Water District Infrastructure Plans Buoyed by Low Interest Rate - The River City News
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