Bond Issue to Fund Shanghai water improvements

A two-year study by Black & Veatch helped lead to the approval of a historic 1.5 billion RMB (approximately $190 million US) corporate revenue bond issue to fund water and wastewater infrastructure improvements in Shanghai. The study developed by Black & Veatch's Enterprise Management Solutions Division (EMS) included in-depth analyses of the overall financial, legal and regulatory elements of the bond funding project.

Aug. 17, 2006

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KANSAS CITY, Aug. 17, 2006 -- A two-year study by Black & Veatch helped lead to the approval of a historic 1.5 billion RMB (approximately $190 million US) corporate revenue bond issue to fund water and wastewater infrastructure improvements in Shanghai. The study developed by Black & Veatch's Enterprise Management Solutions Division (EMS) included in-depth analyses of the overall financial, legal and regulatory elements of the bond funding project.

The bond issue approval for the Shanghai Water Assets Operation and Development Company, Ltd. (SWAOD) marked the first time a water company in the People's Republic of China (PRC) has issued bonds. The SWAOD provides water services to more than 9 million Shanghai residents.

This project was supported by a technical assistance grant provided by the U.S. Trade and Development Agency (USTDA) to SWAOD, which was conferred through a grant agreement signed in September 2002. USTDA's technical assistance is intended to support the World Bank Shanghai Urban Environmental Project and assist SWAOD in the issuance of long-term infrastructure bonds for wastewater infrastructure investments.

"This successful bond issue will help enhance the water services in Shanghai in a very timely manner," said Myron Olstein, Director, EMS. "It also is an important step in creating a financial platform for increasing foreign investment and trade with the PRC."

Water companies in the PRC have historically financed improvements to their infrastructure through a combination of short-term bank loans, government grants and cash. The new SWAOD corporate bonds will accelerate infrastructure improvements by making funds available in a shorter timeframe. The corporate bonds are set at 4.25 percent interest rate with a 15-year maturity. During the next 10 years the SWAOD expects to invest $3 billion to $4 billion in its water and wastewater infrastructure in Shanghai.

"The staff of the SWAOD demonstrated a high level of expertise in utility operations and management. This was a key factor in the successful completion of our study and in this historic bond issue being implemented," Olstein added.

EMS compiled its studies for the SWAOD under the auspices of the USTDA.

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