Bangkok--21 Jun--Standard & Poor's
Standard & Poor's Ratings Services has raised its rating on Tacoma, Wash.'s electric system revenue bonds outstanding to 'AA' from 'AA-'. At the same time, Standard & Poor's assigned its 'AA' rating to Tacoma's series 2010A, 2010B, and 2010C electric system revenue bonds. The outlook is stable.
"The upgrade reflects our opinion of Tacoma's sustained strong financial condition," said Standard & Poor's credit analyst Peter Murphy. Fixed charged coverage at 1.6x or higher during fiscals 2006-2009, and unrestricted cash and investments of more than 300 days' cash on hand in the past two years are very strong metrics, in our view.
"The rating reflects our view of the utility's favorable power supply position, financial risk profile, and good unrestricted liquidity," Mr. Murphy added.
The utility expects to sell the 2010B bonds as direct-subsidy Build America Bonds (BABs), and the 2010C bonds as Clean Renewable Energy Bonds (CREBs). Tacoma has pledged its net electric system revenues to pay all principal and interest due on the bonds. The 2010A and 2010B BABs proceeds will fund general system improvements and will the city will use the series 2010C CREBs to improve two of its hydroelectric projects.
Tacoma Power's 180-square-mile service area includes the 43-square-mile area within Tacoma's city limits. The utility also serves McChord Air Force Base; Fort Lewis Military Reservation; and Ruston and Fircrest, Wash. The city's economy has historically been concentrated in shipping, manufacturing, timber production, and the military. Two military bases, public agencies, and hospitals top the list of the area's leading employers, which also includes such private employers as Fred Meyer Stores; Intel Corp.; Emerald Queen Casino; and Boeing Co., most of which are also electric system customers.
The stable outlook reflects our view of Tacoma's conservative financial management, and its favorable power supply portfolio, which we believe should enable it to maintain a solid cash position and equity capitalization.
RELATED CRITERIA AND 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
Ian Carroll, San Francisco (1) 415-371-5060
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_
[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]
Standard & Poor's,