The Guam Waterworks Authority (GWA) early Wednesday morning secured nearly $12 million in net present value savings on future debt service payments by issuing its Series 2020B water and wastewater revenue refunding bonds.
The restructuring of previously issued Series 2013 debt effectively lowered the true interest cost from 5.56 percent to 3.36 percent over the life of the bonds. This will translate to annual debt-service savings of about $1.9 million per year through 2027. The transaction resulted in the lowest all-in TIC in GWA history of 3.70 percent, improving on the results of GWA refundings in 2014 and 2017.
“The reduced debt service in the short-term will have a positive impact on GWA’s financial performance, especially in light of the recent impacts of the Covid-19 pandemic,” said CCU Chairman Joey Dueñas.
The successful transaction follows the recent, but unrelated, ratings upgrade for prior GWA bonds from Fitch Ratings, who on August 12th upgraded GWA Revenue Bonds to BBB with a stable outlook. Fitch noted that the upgrade to 'BBB' from 'BBB-' is a reflection of the recent rate plan approval by “the Public Utilities Commission for fiscal years 2020 and 2021 that are expected to support solid financial performance despite challenges related to the coronavirus pandemic.”
The 2013 Bonds were used to build new water system reservoirs, make improvements to water distributions lines and most notably, to build the Agat-Santa Rita Waste Water Treatment Plant. At the opening of the $71 million state-of-the-art plant, the Regional Administrator for EPA’s Region 9, described it as the “gem of wastewater treatment facilities for all of region nine.”
“Along with GWA’s proactive fiscal management to adjust to current economic conditions, GWA remains focused on aggressively implementing the capital improvement projects outlined in our 20-year master plan to improve water and wastewater service delivery to all our customers,” Dueñas said.