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Global impact: How to keep rates low

The World Bank brings Denver Water CFO to China to discuss how the utility uses bonds to invest in infrastructure.

The World Bank invited Denver Water’s Chief Financial Officer Angela Bricmont to speak with Chinese financial leaders about the utility’s successful bond performance.

No matter how you slice it, investing in a water system is expensive.

The utility is investing hundreds of millions of dollars into its North System Renewal project, which includes expanding Gross Reservoir, upgrading its Hillcrest storage tanks and pump station and replacing pipes in the Highland neighborhood.

Whether it’s electricity, roads, sewer or water, most people understand the need to maintain and upgrade the critical infrastructure that makes up a vibrant city. But figuring out how to pay for these big ticket items is much more complex — and a question recently posed by the World Bank and China’s Ministry of Finance.

So, who did they ask?

Leading U.S. and international financial experts, including Denver Water’s very own chief financial officer, Angela Bricmont.

When the Brookings Institution ranked Denver Water 5th nationally in water investment performance, the World Bank took notice, and they invited Bricmont to speak with financial leaders in Chengdu, China, to explain how the utility uses bonds to finance necessary, but expensive, infrastructure projects.

Currently, there is no municipal bond market in China, but financial leaders hope to change that by learning from organizations, like Denver Water, with a century of successful bond performance.

“We’ve had a municipal bond market in the U.S. for 100 years, and we’ve seen peaks and valleys in the market, like the tech bubble, stock market crashes and other events,” Bricmont said. “China is hoping to learn from our experiences to build a strong program.”


A view from the sky shows the dense, expansive growth in just one part of the megacity of Chengdu, China. It is in response to this growth, the Chinese government is interested in introducing a bond market to help fund massive infrastructure projects.

Simply stated, a bond is a loan.

Instead of going to the bank for money, an entity can issue a bond, where various investors can loan money toward a specific project. Because the bond market is competitive, the market drives interest rates down, making large loans more affordable. And with staggering population growth, China is looking for a way to increase funding opportunities for vital infrastructure projects.

Chengdu is a megacity in China’s south western Sichuan province, and it’s home to more than 18 million people — 25 times the population of Denver. The Chinese government is working hard to maintain and build infrastructure to keep up with rapid population growth, but it all comes with a hefty price tag.

Sound familiar?

Denver Water is continually balancing the need to keep water affordable today while maintaining and upgrading a resilient water system to meet the needs of a rapidly growing city 50 years from now.

Because Denver Water is funded by rates and fees for new service, not taxes, the utility has to expand its financial portfolio to keep water bills as low as possible.

That’s where municipal bonds come in.

“Issuing bonds, versus borrowing from a bank, allows Denver Water to benefit from its high credit rating to get the lowest rates the market will pay with no strings attached,” said Bricmont.


Conference presenters and attendees gathered in Chengdu, China, at the International Experience on Regulatory Framework for Subnational Project Bonds Workshop in September. (Bricmont pictured front row, 7th from right).

Bricmont said financial leaders in China were most interested in how U.S. ethical and regulatory oversights operate and what financial metrics an organization needs to attract investors. They also were interested in how independent credit rating agencies work, and what makes Denver Water’s bonds attractive to investors.

Because Denver Water has Aaa ratings with all three independent credit rating agencies in the U.S., investors are more likely to choose our bonds because they carry lower risk — a strategy that has saved $8.5 million over the last five years.

This was a popular topic of conversation among Chinese financial leaders — how does Denver Water achieve that Aaa rating?

“It’s not just the dollars we have in the bank that strengthen our rating,” Bricmont told attendees. “How we plan for the future, the governance structure of our organization, how we handle emergencies, what we communicate to our customers, and the financial transparency and accountability we exhibit all play into our rating,” she said. “Credit rating agencies are looking at the entire organization, and investors are looking for a strong, stable organization because they carry lower financial risk.”

Bricmont was awestruck with the growth in China.

“You hear about the megacities in China, but it’s beyond comprehension until you see it. Even then, the growth is still almost unbelievable,” she said. “With a desperate need for infrastructure, there are amazing capital resources in China that are currently untapped. A municipal bond market in the country will truly have a global impact,” said Bricmont.

“I’m excited to see the innovation, technology and creativity China will bring to not only the water industry, but infrastructure as a whole, once the bond market opens up new funding sources for these massive projects.”