Guam Waterworks Authority to bring $200 million

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Guam Waterworks Authority is expected to offer $200 million in triple-tax exempt bonds Monday or Tuesday, two weeks after S&P Global Ratings raised the authority’s outlook to stable from negative. 

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The bonds are rated Baa2 by Moody’s Ratings and A-minus by S&P, with both carrying a stable outlook. 

The bonds are comprised of $110 million new money Series 2020A, $50 million revenue refunding Series 2026B and $40 million of forward delivery revenue refunding Series 2026C bonds, which will be delivered April 13. 

Raymond James and RBC Capital Markets are co-lead managers, with Raymond James running the book. Montague DeRose and Associates is the municipal advisor. Orrick is the bond counsel.

The Baa2 rating is based on the utility’s solid financial position and debt service coverage and Moody’s expectation that the enterprise will continue to implement rate adjustments to maintain adequate debt service coverage. Moody’s said the system is vulnerable to volatile energy costs and large capital costs needed to meet regulatory requirements and replace aging infrastructure. 

S&P said its rating reflected GWA’s commitment to operational and financial improvements. The ratings agency noted Guam‘s strategic value to the U.S. military. The authority’s large and complex capital improvement plan through 2030 should lead to high leverage, “though management’s experience with similar capital projects and recent resolution regarding the [U.S. Environmental Protection Agency] consent decree somewhat mitigates this risk,” S&P said.

GWA said its indentured debt service coverage was 1.51 times in fiscal 2025. The authority projects rate increases in fiscal 2027, 2028, and 2029, and indenture debt service coverage of 1.41 times in fiscal 2026, 1.29 times in fiscal 2027, 1.38 times in fiscal 2028, 1.28 times in fiscal 2029 and 1.26 times in fiscal 2030. 

The authority anticipates spending $1.22 billion on capital improvements from fiscal 2026 to 2030. Of this, $625 million is expected to be raised through short-term borrowing, which will be refunded with the issuance of revenue bonds.