Standard & Poor’s last Friday raised its underlying rating on revenue bonds issued by the Huntsville Solid Waste Disposal Authority to AA from A-plus due to improving debt service coverage and liquidity.
The upgrade affects about $70 million of outstanding HSWDA debt. The outlook is stable.
The new rating also reflects a strong and diverse service area economy, a stable long-term steam sales contract with the U.S. Army that accounts for more than 50% of authority revenues, and sound financial operations, according to a report written by analyst Edward McGlade.
“We believe the authority’s extremely strong cash position will provide management with the significant flexibility to deal with any disruptions within the waste streams, as well as the ability to handle any potential long-term liabilities effectively,” McGlade said.
Financial operations are strong with the HSWDA producing coverage exceeding 1.35 times over the past decade. Annual debt service coverage based on fiscal 2007 operations is 1.82 times. The authority also has cash on hand equal to 1,117 days.
