STAMFORD — Moody’s Investor Service has affirmed the Water Pollution Control Authority’s Aa2 rating ahead of a $22.55 million revenue bond sale, the credit rating agency announced Friday.
“The Aa2 rating reflects the essential service provided by the system, a stable and diverse customer base and satisfactory financial operations supported by timely rate increases,” Moody’s wrote in its report. “The rating also factors the authority’s above average debt ratio and adequate legal covenants.”
Stamford Office of Policy and Management Director Pete Privitera said the credit rating reflected recent efforts by city and WPCA staff to improve the sewage treatment plant’s operations and finances.
“This is great news as it supports all of the hard work by the WPCA Board in addressing deficiencies as well as the administration’s hard work in the preparation of this bond offering,” Privitera said in an email Friday.
The Advocate will have full coverage of the WPCA’s upcoming bond issuance Wednesday. See below for Moody’s full report:
Global Credit Research – 21 Jun 2013
Affirms Aa2 on $28.3M in parity debt
New York, June 21, 2013 –
Issue: Water Pollution Control System and Facility Revenue Bonds, Series 2013; Rating: Aa2; Sale Amount: $22,545,000; Expected Sale Date: 7-2-2013; Rating Description: Revenue: Government Enterprise
Moody’s Investors Service has assigned a Aa2 rating to the City of Stamford Water Pollution Control Authority’s (CT) $22.55 million Water Pollution Control System and Facility Revenue Bonds, 2013 Series. At this time, Moody’s has also affirmed the Aa2 rating on $28.3 million in outstanding parity debt. The bonds are secured by a net pledge of system revenues and are recognized as senior lien obligations of the System, on parity with approximately $53.3 million in existing State Revolving Fund obligations. Approximately $12.8 million of the bonds will be used to finance various capital projects of the system. The remaining $9.8 million will be used to completely refund the authority’s 2003 series revenue bonds for an estimated savings of $972,000, or 9.7% of refunded par. Approximately 94% of the anticipated savings from the refunding will be used to reduce debt service payments in roughly equal amounts during fiscal 2014 through 2017.
SUMMARY RATING RATIONALE
The Aa2 rating reflects the essential service provided by the system, a stable and diverse customer base and satisfactory financial operations supported by timely rate increases. The rating also factors the authority’s above average debt ratio and adequate legal covenants.
– Sizeable and diverse economic base with strong income levels
– Demonstrated willingness to increase rates in support of operating and capital needs
– Ample treatment capacity
– Elevated debt ratio
– Declining trend of sewer flows
– Low cash reserves
WHAT COULD MAKE THE RATING GO UP
– Improvement to debt service coverage levels
– Improved liquidity position
WHAT COULD MAKE THE RATING GO DOWN
– Deterioration of senior and aggregate debt service coverage ratios
– Increasing reliance on inter-fund borrowing for cash flow needs
– Further leveraging of the System’s debt position
The principal methodology used in this rating was Analytical Framework For Water And Sewer System Ratings published in August 1999. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Thomas Bradford Compton
Public Finance Group
Moody’s Investors Service, Inc.
60 State Street
Boston, MA 02109
Valentina A Gomez
Public Finance Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007