Denver Water#s 2016A, B Water Revenue Bonds Assigned #AAA# Ratings

Stocks and Financial Services Press Releases Thursday April 28, 2016 09:04
CHICAGO--28 Apr--Standard & Poor's

CHICAGO (Standard & Poor's) April 27, 2016--Standard & Poor's Ratings Services assigned its 'AAA' rating to the City and County of Denver, Colo.'s (acting by and through its Board of Water Commissioners [Denver Water]), 2016A and B master resolution water revenue bonds. At the same time, Standard & Poor's affirmed its 'AAA' rating on Denver Water's outstanding master resolution water revenue bonds. The outlook on all ratings is stable.

"Extremely strong enterprise and financial risk profiles support the rating," said Standard & Poor's credit analyst Scott Garrigan, "and the enterprise risk profile reflects a broad and diverse economic base, rates that compare well with median household effective buying income, and a strong operational management assessment, in our view." The extremely strong financial risk profile is generally supported by debt service coverage that routinely exceeds 2x, a large unrestricted liquidity position exceeding one year of cash, and a strong financial management assessment.

Net revenues of the water system secure the bonds. The series 2016A bond proceeds will provide funds for capital projects, and the 2016B bond proceeds will refund prior obligations.
Denver Water has a combined service area of 336 square miles and serves a population of about 1.3 million, including Denver and various outlying cities and water districts.

"The stable outlook reflects our expectation that the underlying enterprise strengths that benefit Denver Water should continue to produce financial metrics consistent with the current rating level," added Mr. Garrigan. Supporting this view is management's commitment to consistent rate increases to help support increasing fixed costs.

As long as management continues to produce financial metrics that are consistent with or exceed historical trends while successfully funding its capital plan, we do not expect to lower the rating over the two-year outlook horizon. Of course, any unexpected economic or financial shock that significantly disrupts the system's operations could present downward pressure on the rating or outlook at any time.

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