Connecticut Water Agency’s $2.4B Bond Sale Is a Blowout

Summary

Bloomberg's Martin Braun discusses the $2.4 billion tax-exempt bond sale by Connecticut's Aquarion Water Authority, which attracted over $70 billion in orders. The blowout demand was driven by wealthy Connecticut residents seeking tax-exempt income, a new issuer name offering diversification, broad investor appeal, and cheap pricing. The deal finances the purchase of a water company from Eversource Energy, and water rates in southwest Connecticut are expected to rise 60% over the next ten years.

• Aquarion Water Authority issued $2.4 billion in tax-exempt bonds to buy a water company from Eversource Energy.
• The deal received over $70 billion in orders, a massive oversubscription.
• High demand stemmed from wealthy Connecticut residents, limited new issuance, a new name, and a structure that appealed to many investors.
• Bonds were priced cheaply, attracting wide interest before yields were lowered.
• Eversource Energy is exiting the water business after losses on wind farms and difficulty raising water rates.
• Water rates in southwest Connecticut are projected to rise 60% over the next decade to support the debt.