Bangkok--18 Mar--Standard & Poor's
Standard & Poor's Ratings Services raised its underlying rating (SPUR) on South Jordan, Utah's water revenue bonds to 'AA' from 'A+' based on historically strong coverage and a well-planned capital program and rate structure. The outlook is stable. At the same time, Standard & Poor's assigned its 'AA' rating, with a stable outlook, to South Jordan's water revenue bonds series 2009.
The rating also reflects proximity to the Salt Lake City metropolitan area and residents that exhibit what we consider very strong household incomes; strong financial profile while supporting pay-as-you-go capital funding; formal reserve policy to maintain 25% of water fund operations in reserve; and rate increases adopted through fiscal 2012, with evidence of the city council's willingness to raise rates to support operational and capital needs.
The bonds are secured by net water system revenues. Legal provisions include a debt service reserve requirement of the lesser of 10% of par, maximum annual debt service or 125% of average annual debt service. Additionally, the rate covenant is to maintain net revenues sufficient to provide annual debt service coverage at 1.25x. The bond proceeds will fund a 7.5 million gallon storage tank to access wholesale water at reduced rates for non-peak hours.
"Credit stability takes into consideration the city's above-average incomes that temper concerns for the city's high rates," said Standard & Poor's credit analyst Misty Newland. "Credit stability is also provided by currently strong liquidity and an adequate operating reserve policy."
Located in southeastern Salt Lake County about 15 miles south of Salt Lake City, South Jordan has historically been a bedroom community. The system serves a population of about 53,391 residents and 12,855 culinary water accounts. A fixed geographic area of the system is also connected to a secondary system (irrigation water), which represents about a quarter of its 16,240 combined culinary and secondary customers. The total number of accounts has increased about 82% since 1999. The city estimates that it is about 35%-40% built out. Future growth will include residential and commercial developments. With access to nearby Salt Lake City, many residents commute for employment opportunities. The city will also benefit from a commuter rail station and a light rail station that will connect it to Salt Lake City and Salt Lake International Airport.
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Misty Newland, San Francisco (1) 415-371-5073
Le T Quach, San Francisco (1) 415- 371-5013
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ [email protected]
Americas Customer Service: (1) 212-438-7280
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