Bangkok--12 Nov--Standard & Poor's
Standard & Poor's Ratings Services has assigned its 'A+' long-term rating to Anchorage Municipality, Alaska's $130 million 2009A and 2009B senior-lien electric revenue refunding bonds (taxable Build America Bonds), issued for Anchorage Municipal Light and Power (ML&P). Standard & Poor's also affirmed its 'A+' ratings on the utility's parity bonds outstanding. The outlook is stable.
"In our opinion, credit strengths include strong combined coverage of senior and junior debt service, adequate liquidity for the ratings, substantial financial flexibility, Anchorage's position as the state's economic and business center, and stable operations," sand Standard & Poor's credit analyst Peter Murphy.
Bond proceeds will fund various capital improvements, but mainly ML&P's investment in generating assets it expects will be running in 2013 and 2014.
The utility's service area is 20 square miles and includes most of the downtown and high-density residential areas of Anchorage (GO rating: AA/Stable); Chugach Electric Association (CEA) serves the rest of the city, including most of the lower density outlying areas. Although the utility's service area is smaller physically that CEA's, it estimates that its service areas accounts for approximately half of the retail energy sales within the 2,006 square mile municipality. The Anchorage municipal utility provides electricity to 30,350 customers, of which residential and commercial represent 80% and 20%, respectively.
The stable outlook reflects Standard & Poor's expectations of continued strong financial performance, including strong coverage and liquidity, given concerns about ML&P's operating profile and future challenges. More specifically, the outlook reflects our expectations that the utility will actively seek and acquire additional gas resources given the projected depletion of its supply beginning in 2018, and that the terms of these new gas supply contracts won't significant erode currently strong financial margins. The outlook further reflects our expectation that ML&P will replace its aging generation assets with more cost-efficient turbines, and, given substantial funds generated internally, that debt ratios will remain moderate. We also expect ML&P's competitive rates and recent additional load (that we expect will continue) to produce strong coverage ratios.
RELATED RESEARCH
USPF Criteria: "Electric Utility Ratings," June 15, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Peter V Murphy, New York (1) 212-438-2065
Paul Dyson, San Francisco (1) 415-371-5079