Bangkok--18 Oct--Standard & Poor's
Standard & Poor's Ratings Services raised its long-term rating and underlying rating (SPUR) to 'AA' from 'AA-' on the City and County of Honolulu, Hawaii's senior-lien wastewater revenue bonds and its rating and SPUR to 'AA-' from 'A+' on the city's junior-lien wastewater revenue bonds. At the same time, Standard & Poor's assigned its 'AA' rating to the city's series 2010A and 2010B senior-lien wastewater revenue bonds and its 'AA-' rating to the city's series 2010C junior-lien wastewater revenue bonds. The outlook on all ratings is stable.
"The ratings are based on our opinion of the positive impact of the proposed consent decree on the city's ability to plan and manage its long-term capital needs, as well as the system's diverse customer base and strong liquidity," said Standard & Poor's credit analyst Misty Newland.
The system's long-term capital plan has been largely driven by consent decrees, administrative orders, and regulatory requirements related to wastewater spills and treatment. The city recently reached an agreement with the U.S. Environmental Protection Agency and the State of Hawaii Department of Health on a proposed consent decree, which outlines required system improvements and implementation deadlines to bring the system into compliance with sewage discharge treatment standards under the Clean Water Act and National Pollutant Discharge Elimination System permit requirements. The proposed consent decree will become effective if after review of comments received during the 30-day public comment period the U.S. Department of Justice decides to move the court for entry of the consent decree and the court decides to grant the motion. The proposed consent decree requires the collection system improvements be completed by June 30, 2020, and extends the timeline for upgrading the Honouliuli and Sand Island treatment plants to secondary treatment standards to 2024 and 2035, respectively, from what management had previously anticipated would be a 10-year deadline. Additionally, it resolves several lawsuits related to sewer spills and overflows and eliminates uncertainty related to the city's ability to receive approval for five-year secondary treatment waivers. We understand that the last application for a waiver was denied but has been addressed as part of the proposed consent decree.
We understand that the senior-lien bond proceeds will be used to fund a portion of the city's 10-year capital plan, and the junior-lien proceeds will be used to refund outstanding bonds.
The system provides wastewater services for the Island of Oahu, which had an estimated population of 907,574 for 2009. The city-county of Honolulu's median household effective buying income was strong at 124% of the nation for 2009.
RELATED CRITERIA AND RESEARCH
USPF Criteria: Key Water And Sewer Utility Credit Ratio Ranges, Sept.15, 2008
USPF Criteria: Standard & Poor's Revises Criteria For Rating Water, Sewer, And Drainage Utility Revenue Bonds, Sept. 15, 2008
Complete ratings information is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Misty Newland, San Francisco (1) 415-371-5073
Paul Dyson, San Francisco (1) 415-371-5079