Moody's Investors Service said it has assigned an A3 rating to the Plateau Utility District, Tenn.'s $5.6 million waterworks revenue refunding bonds, Series 2012, and upgraded to A3 from Baa1 $4.9 million in previously rated parity debt.
The bonds are secured by a pledge of net revenues from the water system subordinate to debt service on the Series 2010 bonds (U.S.D.A. - Rural Development obligation), and, importantly, the senior lien is closed.
Proceeds will be used to refund the Sunbright Series 1999, the Plateau Series 2003, the Sunbright Series 2003, and the Plateau Series 2011 bonds for an estimated net present value savings of $1.5 million, or 26.2% of refunded principal, with no extension of maturity.
The upgrade to A3 reflects the system's healthy financial operations, which provides solid debt service coverage and a satisfactory liquidity position.
The rating also incorporates the system's small customer base despite a recent merger with Sunbright Utility District, substantial customer concentration, manageable debt profile, and adequate legal provisions.
