CHICAGO, April 30 (Reuters) - The Chicago City Council on Wednesday approved the issuance of up to $1.05 billion of revenue bonds for water and sewer improvements that are slated to be priced in the third quarter of this year.
The council approved the sale of up to $575 million of second lien water revenue bonds, including $100 million of refunding bonds. The deal is headed by senior underwriter PNC Capital Markets, according to the city’s finance office.
Up to $475 million of second lien wastewater revenue bonds that also includes $100 million of refunding bonds won city council approval as well. Bank of America Merrill Lynch is the senior underwriter.
Moody’s Investors Service in March cut the rating on Chicago’s second lien water and sewer bonds to A3 with a negative outlook from A2 in conjunction with a downgrade that also dropped the city’s general obligation credit rating to Baa1 from A3 due to massive and growing unfunded pension liabilities.
Fitch Ratings, on the other hand, affirmed an AA rating and positive outlook on outstanding water bonds last week, citing multi-year rate increases to fund capital improvements.
Mayor Rahm Emanuel announced in March that the city’s 2014 construction program will include 85 miles of new water mains and 21 miles of new sewer mains. (Reporting By Karen Pierog; editing by Gunna Dickson)