Grand Prairie Water Fee costs debut deal

Illinois’ Grand Prairie Water Fee went to market Monday in a debut deal for the municipal company charged with linking Joliet and close by communities with Chicago’s water system.

The $51.2 million Collection 2025 senior lien water income bonds will kick off building of a $1.2 billion water transmission system, in line with a Credit score Insights report by BAM Mutual, which insured the deal.

“I assumed it went rather well,” stated Anthony Miceli, senior vice chairman at municipal advisor Speer Monetary, following Monday’s pricing. “(The deal had) good follow-through from quite a lot of completely different traders… I feel this units a superb tone.”

JPMorgan priced the deal to yield from 2.99% for the 2034 maturity to 4.66 for the 2055.

The BAM insurance coverage brings a ranking of AA with a secure outlook from S&P International Rankings. Moody’s Rankings assigns an underlying ranking of A2. 

The bond counsel is Katten Muchin Rosenman LLP, in line with the preliminary official assertion.

Miceli stated the group was proud of the timing of the deal. “There was heavy provide final week; we prevented that,” he stated. “It was fairly quiet all in all.” 

The bonds are senior lien obligations and restricted obligations of the fee, payable from the revenues of the system and sure different moneys and securities held by the trustee beneath the grasp belief indenture and first supplemental indenture.

The regional water fee consists of six municipalities in Will, Kendall and Grundy counties: Joliet, Romeoville, Crest Hill, Channahon, Minooka and Shorewood.

The fee is led by Joliet, which supplies administration companies for the fee and which finalized a 100-year water provide settlement with Chicago in 2023 to purchase handled Lake Michigan water beginning in 2030, in line with an on-line investor presentation for the deal. 

Joliet started exploring water provide choices as a result of the aquifer it attracts water from now .

Beneath the phrases of the settlement, Chicago agrees to supply handled Lake Michigan water to Joliet by way of Dec. 31, 2123, as much as 105 million gallons per day.

The settlement offered credit score advantages to each Joliet and Chicago, Moody’s Rankings stated on the time.

Joliet transferred that settlement to the fee in August 2025.

The fee’s members signed a grasp water provide settlement in July 2024 which obligates the fee to promote Lake Michigan water to the members. Every member is in flip obligated to purchase all of the water crucial to fulfill its full water necessities from the fee.

Joliet offered bonds in 2022 as a part of this challenge, in that case to finance an overhaul of 192 miles of worn water strains and assist cowl design and engineering prices of the brand new Lake Michigan line. 

The challenge carries some execution danger, with price overruns and rising system leverage among the many potential challenges.

Whereas the fee has restricted monetary audits, the authorized construction for the bonds is strong, in line with BAM. Member funds to GPWC are thought-about working and upkeep prices, and are subsequently senior to every member system’s personal debt service.

BAM’s evaluation concluded that water charges ought to stay inexpensive at the same time as whole excellent debt will increase because the system is constructed out between now and 2030.

“BAM first evaluated every member neighborhood’s utility system, which embrace various buyer bases, low present charges relative to family revenue, and powerful liquidity positions, after which used conservative assumptions to estimate future charges upon challenge completion,” Juliet Stiehl, co-head of public finance at BAM, stated by electronic mail.

The Trump administration-induced volatility round federal funding additionally brings a component of uncertainty to the deliberate $609.88 million of Water Infrastructure Finance and Innovation Act loans from the U.S. Environmental Safety Company, which account for 49% of the whole challenge prices.  

The administration moved to slash water infrastructure funding in its 2026 finances proposal, and has canceled a whole lot of Environmental Safety Company grants.

“Town has closed on two loans, we’re engaged on third now,” stated Kevin Sing, Joliet’s finance director. “The fee is within the strategy of (getting) its first mortgage now… We have not heard of any legislative modifications that will affect it.”

Joliet will bear 49.38% of the prices of the fee’s new system. Romeoville will bear 14.16%, Crest Hill 9.38%, Channahon 9.2%, Minooka 9.06% and Shorewood 8.83%.

The allotted prices are apportioned primarily based on every municipality’s share of the system, Sing stated.

The fee expects to situation $428.18 million whole of income bonds towards the challenge prices. 

An extra $120 million of Illinois EPA loans are additionally a part of the funding combine, and $30.8 million will come from different sources.

Jessica Lerner contributed reporting.