West Wilson Utility District, TN Water Bond Rating Raised To #AA# On Continuously Strong Financial Profile

Stocks and Financial Services Press Releases Tuesday April 18, 2017 09:11
CHICAGO--18 Apr--S&P Global Ratings

CHICAGO (S&P Global Ratings) April 17, 2017--S&P Global Ratings raised its long-term rating on West Wilson Utility District, Tenn.'s outstanding water revenue bonds one notch, to 'AA' from 'AA-'. At the same time, we assigned our 'AA' rating to the district's 2017 water revenue refunding bonds. The outlook is stable.

"The one notch upgrade is a result of the district maintaining a very strong financial profile represented by all-in debt service coverage at levels we consider extremely strong and unrestricted liquidity at levels we consider very strong," said S&P Global Ratings Gregory Dziubinski. "The upgrade is also based on our expectation that management will continue to preserve the district's very strong financial profile."

The 'AA' rating reflects our opinion of the combination of a very strong enterprise risk profile and a very strong financial risk profile.
The district is issuing its series 2017 water refunding revenue bonds for the purpose of refunding its outstanding series 2006 water revenue bonds and to advance refund its series 2010 bonds.

The bonds are secured by a lien on the net revenues of the district's retail water system, subordinate only to about $600,000 in U.S. Department of Agriculture Rural Development loans that will be repaid by 2021. Management uses the subordinate lien as its active or working lien. Because of the small amount of prior-lien debt outstanding relative to nearly $88 million outstanding on the working lien, and that no additional prior-lien debt may be issued, we do not view the subordinate-lien bondholders as materially disadvantaged and are thus not implying a rating distinction between the two liens. A fully funded debt service reserve in the amount of the lesser of maximum annual debt service, 125% of average annual debt service, or 10% of par provides additional liquidity. Other provisions include a rate covenant requiring 1.2x annual debt service coverage and an additional bonds test requiring 1.2x maximum annual debt service coverage on existing and new debt.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information.

Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and atwww.spcapitaliq.com.
All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.

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