Moody’s Investors Service has downgraded Onondaga County Water Authority’s outstanding parity revenue bonds to Aa3 from Aa2.
The rating affects $70 million in debt.
“The Aa3 rating reflects the system’s adequate financial operations, characterized by strong but declining debt-service coverage and improving but still well below average unrestricted reserves,” Moody’s analysts said in a report.
The rating also reflects a favorable but growing debt profile, an ample and diverse water supply, and a stable service area with significant concentration and modest annual growth.
The OCWA’s primary purpose is to supply water to residents and businesses in the central New York region and is financed solely by the revenues from the sale of water and related services to its customers.
The authority’s outstanding parity revenue bonds are secured by a first lien on net system revenues.
Continued declines in net revenue, substantially increased debt levels, and significant reductions of reserve balances could cause a further downgrade, according to Moody’s analysts.
