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  • By Mar-Vic Cagurangan

GWA sells $134 million in infrastructure bonds

The Guam Waterworks Authority has sold $134 million in revenue bonds, which attracted orders totaling $2.946 billion, 22 times more than the available amount in bonds offered, GWA said Friday.

GWA said Revenue Bonds Series 2020A received "an overwhelming response" and the high demand from investors allowed the water company to further reduce the interest rate by 25 basis points from 4.25 percent to 4 percent.

“The bond sale is a great day for GWA and Guam. This just demonstrates GWA's continuing success story as a best in class utility,” said CCU Commissioner Joey Duenas.

Proceeds from the bonds will be used for capital improvement projects that require immediate financing such as $40 million for court-ordered projects; $39 million for potential consent decree; and $12 million for water loss control, according to the Consolidated Commission on Utilities' resolution approved on Jan. 28.

The bonds are payable from GWA's own revenue, according to CCU.

"The success of this bond issuance during the prevailing market conditions in light of the Covid-19 pandemic is truly a testament to investor confidence in GWA's ability to deliver on its plans for system improvements for our ratepayers," GWA General Manager Miguel Bordallo said. "This confidence would not be possible without the hard work of the men and women of GWA, who provide demonstrated results of our improvement, day in and day out."

Gov. Lourdes Leon Guerrero and members of her fiscal team, including the Guam Economic Development Authority, joined the GWA in 14 investor meetings and calls held prior to the bond pricing.


During these conference call meetings—that were held on Guam—Gov. Leon Guerrero addressed investors saying, “This GWA financing is further evidence of the strength of Guam. We as a community continue to make the necessary investments in our island’s infrastructure and GWA’s efforts—both in dealing with the impacts of the Covid-19 pandemic and continued strengthening of GWA’s financial position over recent years—are a testament to our island’s resilience.”

GWA said the strong interest from investors was a signal that the Municipal Bond Market has recovered from recent selloffs over the last two months. The GWA bonds received investment grade ratings of A- from Standard & Poor's and a Baa2 from Moody's Investors Service. The sale of the bonds is scheduled to close on June 4, 2020 when the funds are deposited into GWA accounts.


According to its report to ratepayers on April 10, 2019, additional bond offers are slated to occur in FY 2022 at $60 million and again in FY2023 for $66 million.

"The financial, plan, as proposed, will support GWA's financial stability to meet these obligations, fund all cash reserve requirements, provide for internally funded capital outlays and pay for ongoing operations and maintenance programs."

According to the report, GWA currently has an estimated $500 million in outstanding debt composing mostly of revenue bonds and subordinate loans.

"Payment of these debts make up the largest item of GWA's annual budgets. With the additional borrowing, payments, will increase from the current $31 million to an estimated $47 million a year by FY 2024. With the rates as proposed, GWA will continue to meet two standards of debt service coverage ratios of 1.75 and 1.25 respectively required by the Public Utilities Commission and GWA covenants."

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