NEW YORK - Standard & Poor's Ratings Services said it has raised its rating on the city of Arlington, Wash.'s water and sewer revenue bonds outstanding to AA-minus from A-plus. The outlook is stable.
"The upgrade reflects our view of consistently high debt service coverage on the senior-lien debt, good liquidity, and no additional debt plans," said Standard & Poor's credit analyst Adam Torres.
More specifically, the rating reflects the following credit strengths: solid historical financial performance with senior-lien DSC in the past three years no lower than 4.96x, excluding one-time tap-in fees; consistent and planned rate increases for both water and sewer service; and a primarily residential customer base that has sufficient water supply and sewer capacity.
The customer base's primarily residential and diverse nature provides what we view as good revenue stability, although the system is comparatively smaller, with about 4,530 sewer and 5,350 water accounts, representing a population of about 16,000. The water system has adequate supply to meet peak demands of 2.7 million gallons per day (mgd), while available supply is 4.7 mgd.
The stable outlook reflects continued rate increases will maintain strong debt service coverage. Adding to the rating's stability is the customer base's residential nature and access to Everett, Wash., job base. Standard & Poor's does not expect to raise the rating during its two-year outlook period; significant financial deterioration could lead to a downgrade.
