Springfield, Mo., Utility Sr Upgraded to Aa2 by Moody's

Moody's Investors Service said it has upgraded Springfield, Mo.'s Board of Public Utility's senior lien revenue bond rating to Aa2 from Aa3 and subordinate lien 2006 lease obligation rating to Aa3 from A1.

The rating outlook is stable.

The upgrade reflects the utility's prudent fiscal management and demonstrated willingness to proactively advance approve multi-year base rate increases to adequately fund capital investments while maintaining strong and stable financial metrics and competitive retail rates.

The upgrade also reflects the utility's successful commissioning of its 300 MW dual fuel capable coal/gas fired unit since January 2011 and the plant's use of the best available control technology (BACT), which provides the utility with multiple environmental compliance options, but the facility is not yet permitted to run only on natural gas.

The ratings also consider the utility's unregulated local rate-setting authority and monopoly provider of essential services in a relatively stable service area with as a large university town and a regional economic hub and health care center.

The utility's fleet continues to operate well and does not require significant investment to meet current and near-term environmental compliance standards. Resource planning is relatively more constrained than other public power utilities due to the requirement of voter approval of all long-term revenue bond issuances, but subordinate lease purchase agreements can be entered into without a referendum.

The Aa3 subordinate rating is one notch lower than the senior lien given the lower total debt service coverage and the weaker legal security with no debt service reserve fund and a sum sufficient rate covenant and additional bonds test.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER