JEA secures $397 million water and sewer debt issuance amid strong investor demand

JEA secures $397 million water and sewer debt issuance amid strong investor demandThe Jacksonville Energy Authority capitalized on strong market appetite to fund its capital program, drawing over $1 billion in orders for its recent water and sewer revenue bonds despite a dip in capacity fee collections.

JEA closed a $397.1 million new money debt issuance for its water and sewer system at a premium, generating $430.2 million in gross proceeds with a true interest cost of 4.24%.

The offering was 2.3 times oversubscribed, receiving over $1 billion in orders from 66 different investor accounts.

Proceeds were used to pay off a $275 million revolving credit facility, with $152.7 million deposited into the utility's construction fund to support ongoing capital projects.

Water system revenues are currently tracking 3.4% below budget, primarily due to lower-than-anticipated capacity and extension fees.

The utility is forecasting to end the fiscal year $44 million under its water capital budget, representing a 92% execution rate.

The Jacksonville Energy Authority (JEA) has successfully leveraged strong investor appetite to bolster its water and wastewater capital program, closing a $397.1 million new money debt issuance in July. During the utility's August 25 board meeting, Senior Vice President of Finance Juli Crawford reported that the water and sewer bonds were issued at a premium, yielding $430.2 million in gross proceeds. The transaction achieved an all-in true interest cost of 4.24%. The offering proved highly attractive to the market, drawing more than $1 billion in orders across 66 different investor accounts, leaving the issuance 2.3 times oversubscribed. The influx of capital allowed JEA to immediately pay down a $275 million balance on its revolving credit facility. The remaining $152.7 million was deposited directly into the utility's construction fund to finance ongoing water and wastewater infrastructure projects. Additionally, the transaction enabled the utility to refund $63.3 million in existing bonds, bringing the total transaction size to approximately $496.5 million. The payoff of the revolving credit facility significantly boosted the water system's liquidity, pushing it to 570 days of cash on hand. The successful capital injection comes as JEA navigates a slight softening in certain revenue streams. Year-to-date water system revenues are trailing the fiscal year 2026 budget by 3.4%, standing at $609.6 million against a projected $631.2 million. Crawford noted that this shortfall is primarily driven by capacity and extension fees coming in $11.9 million below budget, though actual collections are tracking closely with the previous year's figures. Despite the revenue dip, the utility's water debt service coverage remains robust at 2.72 times, well above the 2.00x target. Meanwhile, JEA is projecting to finish the fiscal year $44 million under its water capital budget, achieving a 92% execution rate on its planned infrastructure investments. In other water-related business, the board approved a seven-year chilled water services contract extension with UF Health Shands Hospital, which will generate approximately $5.8 million in annual revenue for the utility's District Energy System. The meeting's agenda packet also highlighted a recently awarded $34.3 million, five-year contract with Keville Enterprises, Inc. to provide supplemental project support services for water and wastewater construction and design activities.