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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis plans to sell $560 million of municipal bonds to refinance variable-rate debt and to end an interest-rate swap, Bloomberg News reported this morning.
Proceeds from the sale will retire three bond issues sold in 2004 and 2005 when Indianapolis bought Indianapolis Water from Merrillville-based NiSource Inc. The proceeds also will help end a bond-swap that backfired after the financial market meltdown.
In 2005, in what looked like a smart way to free up $45 million in extra cash for Indianapolis Water capital projects, the utility, through the Indianapolis Bond Bank, refinanced fixed-rate bonds into variable-rate debt. It did so with such abandon that variable-rate debt now amounts to nearly 60 percent of its $845 million in outstanding bonds.
Last year, the city water utility made $26 million in additional debt payments because of the swap. A rainy spring also reduced water demand and revenue.
The utility recently won approval from the Indiana Utility Regulatory Commission to boost rates 12.3 percent.
Earlier this month both Fitch Ratings and Moody’s Investors Service cut ratings on the water utility’s debt.
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