The Indiana Finance Authority plans to price up to $217 million of state revolving fund program bonds that have a green designation Wednesday.
The green bonds are earmarked to fund loans for eligible water and wastewater projects that are verified as environmentally beneficial.
Ice Miller LLP is bond counsel. PFM Financial Advisors LLC is municipal advisor. Citi is the senior manager. JPMorgan is the co-senior manager. Mesirow Financial, Inc., Stifel and Ramirez & Co., Inc. are co-managers.
Moody’s has affirmed its Aaa rating on the bonds. S&P Global Ratings and Fitch Ratings rate the bonds AAA, though they haven't weighed in on the forthcoming bond sale.
“The very strong credit quality of the program is rooted in its ability to tolerate a high level of unlikely loan defaults without impairing debt service payments over the life of the bonds,” said Moody’s.
IFA provides loans financed with SRF funds to participants that include municipal water, sewage and storm water works, sanitary districts, regional water and sewer districts, conservancy districts, nonprofit corporations and other entities that own and operate a public drinking water system.
Participants typically finance their projects with municipal bonds, secured by a pledge of system revenues.
Fort Wayne and Evansville are the biggest participants each borrowing $439 million and $381 million respectively and roughly 30% of total borrowing under the SRF loan program, according to the IFA.
The green bond designation can make projects eligible for improved ranking on the SRF project priority list as well as an interest reduction up to 0.5% on its SRF Loan. IFA spokeswoman Stephanie McFarland said the designation had no effect on pricing, however.
The authority is responsible for the administration and management of the state revolving funds. Bond proceeds and recycled funds are combined with federal grants and a state matching requirement to provide loans for such projects. The state established the program to provide financial assistance to political subdivision for eligible clean water and drinking water projects.
“There is no reliance on state funding to the programs,” the IFA said in an investor presentation.
As of June 30, 2018, the IFA has roughly $1.5 billion of bonds outstanding backed by approximately $2.4 billion of loans. IFA has issued green bonds for SRF since 2015 and the outstanding amount is roughly $892 million.
The IFA
Indiana’s water infrastructure task force established by the General Assembly at the beginning of 2018 said in an October report that the state could use the SRF program to fund projects.
