GLWA heads to market with upgrades, deal with Highland Park

Michigan-based Great Lakes Water Authority is set to return to market with upward of $400 million of a combination of senior and second lien water supply and sewer disposal revenue and refunding bonds with two ratings upgrades and after it took a step toward ending a years-long legal dispute with a city just north of Detroit. 

Moody’s Investors Service on Oct. 24 upgraded GLWA’s senior water bonds and senior sewer bonds rating to Aa3 from A1 and its second lien bonds to A1 from A2.

Fitch Ratings on Oct. 25 upgraded ratings on the GLWA’s bonds that were previously issued by Detroit and the Michigan Finance Authority on behalf of the Detroit Water and Sewerage Department and assumed by GLWA —which was by the authority. Earlier this year, Highland Park’s debt triggered calls for help from the state. 

The proposed deal would include payment assurances from Highland Park and Michigan’s investment in capital improvements in Highland Park and the GLWA. The agreement would “support a fresh start with the GLWA-Highland Park relationship,” the water authority said in a written statement. 

“I’m proud that GLWA and Highland Park are one step closer to an agreement to ensure that we can protect access to drinking water for every family in the community,” Michigan Gov. Gretchen Whitmer said in a press release. An agreement will help the community move forward, lower costs and implement a “fairer system” for surrounding communities, she added. 

While the agreement is a positive achievement, Parkhurst said it’s not material for Fitch when it comes to an impact on the metrics the rating agency analyzes. 

Fitch said GLWA has about approximately $1.6 billion senior lien water supply system revenue bonds outstanding, about $708.1 million of second lien water supply system revenue bonds, $1.79 billion senior lien sewage disposal system revenue bonds and $736.4 million second lien sewage disposal system revenue bonds.