Pueblo Board of Water Works, CO Revenue Bond SPUR Raised To 'AA-' On Good Coverage And Strong Liquidity

Stocks and Financial Services Press Releases Monday September 28, 2009 09:31
Bangkok--28 Sep--Standard & Poor's

Standard & Poor's Ratings Services raised its underlying rating (SPUR) to 'AA-' from 'A+' on the Pueblo Board of Water Works, Colo.'s outstanding water revenue bonds. In addition, Standard & Poor's assigned its 'AA-' rating to the board's series 2009A and 2009B taxable (Build America Bonds -- Direct Payment) water revenue bonds. The outlook is stable.

"The raised ratings reflect the board's track record of strong liquidity levels and good coverage ratios, as well as its willingness to adjust rates as necessary," said Standard & Poor's credit analyst Bryan Moore.

The board intends to issue series 2009B as Build America Bonds (BABs) and has elected to receive cash subsidy payments from the U.S. Treasury in an amount equal to 35% of interest payable on the series 2009B taxable bonds.

We believe the system's strong liquidity represents a key credit strength. Audited fiscal 2008 system liquidity was $20.1 million, what we consider a strong 376 days' operations. In our opinion, the system's net revenues have generated historically strong annual coverage ratios of 1.7x or greater from fiscal 2004 to fiscal 2008. Board-projected fiscal 2009 net revenue, excluding the one-time sale of water rights from the Columbine Ditch, would provide a coverage ratio of 1.2x average annual debt service, or 1.0x MADS, on outstanding parity bonds and the proposed bonds. Pro forma MADS occurs in November 2015. If including the BABs subsidy, coverage of outstanding and pro forma average annual debt service by projected fiscal 2009 net revenue would increase slightly to 1.3x. Although these coverage ratios are lower than historical levels, the board reported that it plans to continue to raise rates and will maintain cash reserves at or near the current levels, which we consider strong. The board is projecting a 15% increase in water sales for fiscal 2010, which we believe may be optimistic given that sales for fiscal 2009 declined by 2% despite a 4.75% rate increase. Additionally, the board has thus far only adopted a rate increase of 3.75%, and it plans to raise rates another 4.25% for fiscal 2010. Based on the board's aforementioned revenue forecast in 2010, the estimated average annual debt service coverage ratio would increase to 1.7x with the BABs subsidy.

The Pueblo Water Works serves a population of 108,269 concentrated on the City of Pueblo, 45 miles south of Colorado Springs.
RELATED RESEARCH
USPF Criteria: "Key Water And Sewer Utility Credit Ratio Ranges," Sept.15, 2008

Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; 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, ana_sandoval@standardandpoors.com
Analyst Contacts:
Bryan A Moore, San Francisco (1) 415-371-5077
Matthew Reining, San Francisco (1) 415-371-5044
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ relations@standardandpoors.com
Americas Customer Service: (1) 212-438-7280
research_request@standardandpoors.com

Latest Press Release

SET announces 63 listed firms, five CEOs nominated for SET Awards 2018

63 listed companies and five CEOs have been nominated for SET Awards 2018. The announcement and the award presentation, which is the fifteenth of its kind, will take place on November 27, 2018. SET President Pakorn Peetathawatchai said that The Stock...

Fitch Ratings: Global Power Synergy Still on Watch after Appeal of Regulator Decision

The ratings on Global Power Synergy Public Company Limited (GPSC) remain on Rating Watch Negative (RWN) after the company said it submitted an appeal of the Energy Regulatory Commission's (ERC) order to block GPSC's acquisition of GLOW Energy Public...

Fitch Affirms Makro#s Rating at #A(tha)#; Outlook Stable

Fitch Ratings (Thailand) Limited has affirmed Siam Makro Public Company Limited's National Long-Term Rating at 'A(tha)'. The Outlook is Stable. KEY RATING DRIVERS Overseas Expansion Drives Rising Leverage: Makro's funds from operations (FFO) adjusted...

Fitch Affirms CP ALL#s Ratings at #A(tha)#; OutlookStable

Fitch Ratings (Thailand) Limited has affirmed retailer CP ALL Public Company Limited's National Long-Term Rating at 'A(tha)' with a Stable Outlook. Fitch has also affirmed the National Long-Term Rating of its secured bonds at 'A(tha)', the National...

KTC achieves major milestone with a net profit of 3.911 billion Baht in Q3,with preparations in motion to diversity into Nano and Pico Finances.

KTC declares a net profit for the end of Q3 of 3.911 billion Baht. Profits have grown 65 percent due to a surge in credit card spendings, receivables from credit cards and personal loans, along with the upholding of approval standards within appropriate...

Related Topics