Bangkok--30 Jun--Standard & Poor's
Standard & Poor's Ratings Services raised its underlying rating (SPUR) one notch to 'A+' from 'A' on , Ariz.'s senior-lien utility system revenue bonds, issued for the city of Yuma.
"We base the upgrade on the system's good financial performance including good coverage and liquidity," said Standard & Poor's credit analyst Timothy Barrett.
The SPUR rating also reflects our view of the system's:
-- Diverse customer base, which has exhibited steady growth;
-- Sufficient water rights to accommodate buildout;
-- Ample water and sewer treatment capacity to meet increasing demand;
-- Demonstrated willingness to increase rates, as necessary, to maintain sound financial operations; and
-- Currently low combined water and sewer rates.
Tempering factors in our opinion include the system's partial reliance on connection fees to maintain good coverage; and significant planned water and sewer rate increases in the next five years to help fund its large growth-related capital needs.
"The stable outlook reflects our view of the system's continued stable customer base, which has experienced what we consider good and manageable growth due to Yuma's ample water and sewer capacity," Mr. Barret added.
The outlook also reflects our expectation that management will successfully implement the city council-approved rate adjustments since they are necessary to maintain sound system operations, including adequate liquidity and sound debt service coverage. In the past, management has exhibited a willingness to increase rates to meet capital improvement plan demands. In addition, the stable outlook reflects our expectation that residential growth will continue to generate sufficient development fees to help provide good coverage.
A first-lien pledge on Yuma's net water and sewer system revenues secures the bonds.
The city provided water and sewer services to approximately 26,000 water customers and 21,000 sewer customers.
Complete ratings information is available to RatingsDirect subscribers at . All ratings affected by this rating action can be found on Standard & Poor's public Web site at ; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
Analyst Contacts:
Timothy Barrett, New York (1) 212-438-6327
Shannon Groff, San Francisco (1) 415-371-5005