Bangkok--24 Nov--Standard & Poor's
Standard & Poor's Ratings Services has assigned its 'AA+' rating to Phoenix Civic Improvement Corp., Ariz.'s series 2011 junior-lien wastewater system revenue refunding bonds, issued for the city of Phoenix. At the same time, Standard & Poor's has affirmed its 'AAA' rating on the corporation's senior-lien wastewater bonds outstanding and its 'AA+' rating on the corporation's junior-lien wastewater bonds outstanding. The rating outlook remains stable for both liens.
"The ratings continue to reflect our view of the large and diverse economic and customer base of the city of Phoenix ('AAA' GO rating)," said Standard & Poor's credit analyst James Breeding.
Additional credit strengths include:
- Very strong coverage of both senior- and junior-lien debt service;
- Strong system liquidity;
- Low wastewater rates, as well as low combined water and sewer rates; and
- Flexibility to adjust the system's capital improvement plan (CIP).
Bond proceeds will be used to refund the corporation's series 2001 junior lien bonds.
A senior lien on net revenues of the city's wastewater system secures the senior-lien wastewater bonds, while a second lien on net wastewater system revenues secures the junior-lien wastewater bonds. The senior lien remains open; however, the city has indicated an intention to use the senior lien only for refunding purposes, or for use during especially turbulent market conditions, although it is not legally restricted from issuing additional senior-lien debt. Legal provisions on the senior-lien debt include a projected 1.20x additional bonds test and a 1.20x rate covenant, while the junior-lien debt requires a 1.15x rate covenant and a projected 1.15x additional bonds test on existing and proposed revenue bond debt.
The stable outlook reflects Standard & Poor's expectation of continued strong financial performance levels as the city annually re-sizes its CIP to meet fluctuating growth trends. Phoenix's broad and diverse economic base also lends stability to the rating. Maintenance of the rating depends on the system's ability to preserve strong wastewater system liquidity levels in light of the lack of debt service reserves.
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 subscribers of RatingsDirect on the Global Credit Portal atwww.globalcreditportal.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:
Ola Fadahunsi, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
James Breeding, Dallas (1) 214-871-1407
Robert Hannay, San Francisco (1) 415-371-5038