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Corpus Christi, Texas, which has been hit with rating downgrades due to a looming water supply crisis, plans to sell up to $728 million of bonds. <\/p>\n Corpus Christi, Texas, which has been hit with rating downgrades due to a looming water supply crisis, plans to sell up to $728 million of bonds. <\/p>\n
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The Corpus Christi City Council on Tuesday gave final approval to the issuance of up to $728 million of bonds in the wake of rating downgrades and negative outlooks spurred by depleted water supplies.<\/p>\n
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The drought-stricken Texas city’s upcoming debt consists of no more than $500 million of utility system senior lien revenue bonds for water and wastewater projects, $113.17 million of\u00a0 refunding bonds, as well as $115 million of general obligation bonds tapping voter-approved authorization from 2022 and 2024.<\/p>\n
“The city is collaborating with its financial advisor to determine the optimal timing for entering the market to price the bonds,” a statement on Tuesday from Corpus Christi’s Finance Department said. “Additionally, we are assessing various underwriters for the upcoming transactions.”<\/p>\n
A timeline presented to the city council last week showed the bonds pricing in August.<\/p>\n
A Level 1 emergency \u2014 indicating the city’s water system is 180 days from supply not meeting demand \u2014 has been projected<\/a> for September.<\/p>\n Previous projections<\/a> had the onset of a water supply emergency as soon as May, in November, or never. Corpus Christi Water, a city agency, is the primary water supplier for a seven-county region, which is experiencing stage three drought conditions<\/a> that triggered water-use restrictions.\u00a0<\/p>\n While the city has been scrambling to boost water supplies, the looming crisis is weighing on its credit ratings.\u00a0<\/p>\n Last week, S&P Global Ratings downgraded the city’s utility system revenue debt rating two notches to A<\/a> and placed it on CreditWatch indicating the potential for another downgrade over the next six months “if Corpus Christi’s acute drought conditions worsen and result in a prolonged Level 1 emergency that pressures its operations, financial performance, rate-raising practices, and economic activity.”<\/p>\n Moody’s Ratings, which downgraded<\/a> Corpus Christi’s GO rating to A1 from Aa2 and utility system rating to A1 from Aa3 in December, launched a review last month for another round of potential downgrades<\/a>.\u00a0\u00a0<\/p>\n Fitch Rating has assigned negative outlooks<\/a> to the city’s AA issuer and AA-minus utility system ratings.<\/p>\n