Birmingham Water Works Achieves over $35 Million in Savings

Date:
07-14-2021
Category:
Business

On July 14, the Birmingham Water Works Board (BWWB) approved the final sale of over $480 million in taxable bonds to replace higher interest rate bonds, reducing BWWB’s debt by over $35 million without extending the maturity of the debt.

In addition, the BWWB was able to eliminate over $287 million in subordinate debt. The refinancing is a part of the BWWB’s plan to reduce its long-term debt and is the second-highest amount of savings achieved in the Board’s history.  

The most notable factor contributing to the success of the transaction is that in preparation for the sale of the bonds, the BWWB received a Aa2 bond rating from Moody’s Investors Service  and a AA rating from S&P Global, among the highest-possible ratings assigned by the credit  rating agencies. Ratings at this level among other factors serve to boost investor confidence as indicated by the results of this transaction.
 
Both ratings confirmed BWWB’s stable outlook that reflects the board's prudent fiscal management practices, conservative budgeting, and formal financial policies. Also, the ratings account for the utility’s higher-than-average debt levels, which are offset by the Board’s healthy financial position, characterized by solid reserves, liquidity, responsible rate-setting, and debt service coverage levels. Service area stability, marked by strong economic growth within  Birmingham and surrounding areas, also factors into the ratings.  

“The bond ratings are a reflection of the work and dedication our management team commits to ensuring that Birmingham Water Works is a top-tier water provider that we all can be proud of,” says BWWB General Manager Michael Johnson. “This honor is shared by our Board Chair  Ronald Mims, Finance Committee Chair Larry Ward, and the rest of the Board of Directors who  oversee the management of the system and its assets.”

“Managing the financial resources of such a large utility and taking advantage of opportunities such as this refinancing saves money and helps our ratepayers. This is especially rewarding as we continue to operate during the pandemic where prudent financial decisions have to be made,” says Assistant General Manager of Finance & Administration Iris Fisher. “BWWB achieving these ratings is something we’re proud of, and we are happy to commend our employees for also helping to make this happen.”  

The BWWB executive management team is especially thankful for the help of our financial advisor Terminus Municipal Advisors, LLC, and our underwriting syndicate led by senior manager  Raymond James, and co-managers Piper Sandler, Blaylock Van, and San Blas Securities. Blaylock  Van and San Blas Securities are both Historically Underutilized Businesses and their engagement underscores the BWWB’s commitment to diversity throughout its operations. Also, we would like to thank other professionals who advised on this transaction.