Bangkok--17 Jun--Standard & Poor's
Standard & Poor's Ratings Services has raised its rating on the Pinole Joint Powers Financing Authority, Calif.'s wastewater revenue bonds, series 2006 to 'A+' from 'A'. The outlook is stable. The wastewater system's net revenues secures the bonds.
"The higher rating reflects our view of the utility's stronger financial risk profile due to a substantial rate increase in fiscal 2007 and the increases approved for fiscals 2010, 2011, and 2012," said Standard & Poor's credit analyst Judith Waite. Management estimates that net revenue available for debt service will be about $1.2 million, which would provide almost 2x debt service coverage (DSC) on the 2006 bonds' annual debt service of approximately $625,000. Debt service payments begin in fiscal 2010. The rate increases have also improved liquidity, increasing available cash to more than $1 million in fiscal 2009 from nothing in fiscal 2006. We expect the additional rate increases will result in greater cash reserves. Management does not expect to issue significant debt since it believes its sewer system investment in the past few years provides adequate capacity for Pinole's customers.
Pinole is a largely residential city in western Contra Costa County. Located in the San Francisco Bay Area, city residents have good access to employment opportunities throughout the San Francisco-Oakland metropolitan areas.
The wastewater system provides collection, treatment, and disposal services to Pinole, except for a small area that another regional system serves. The system also provides treatment services to the City of Hercules through a joint powers agreement. Hercules manages its own collection system. However, Pinole also provides collection system maintenance services. Through a joint powers agreement, Pinole and Hercules have an equal ownership interest in the treatment plant, and share the cost of mutually beneficial capital projects. Pinole does not expect to have significant customer growth, as it is mostly built-out. It services 5,404 equivalent dwelling units (EDU), with a service population of about 19,383. Including Hercules, the system serves about 6,075 EDU with a service population of about 24,324.
The stable outlook reflects our expectation that approved rate increases will provide DSC above the minimum level required and maintain at least the current level of liquidity.
RELATED CRITERIA AND RESEARCH
USPF Criteria: Standard & Poor's Revises Criteria For Rating Water, Sewer, And Drainage Utility Revenue Bonds, Sept. 15, 2008
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Judith Waite, New York (1) 212-438-7677
Michael P Taylor, New York (1) 212-438-1458
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]