Standard & Poor's Ratings Services said it raised its long-term rating and underlying rating on Dadeville Waterworks & Sewage Board, Ala.'s water and sewer revenue debt one notch to A-minus from BBB-plus.
The outlook is stable.
The upgrade reflects Standard & Poor's opinion of the recently authorized city sales tax payments dedicated for board debt service because such payments helped provide good debt service coverage in fiscal 2014. Due to the board's lack of additional debt plans, the rating service believes management will now likely maintain more-adequate debt service coverage.
"We consider unrestricted cash nominally low. If management were to deplete cash to lower levels, we could lower the rating," said Standard & Poor's credit analyst Scott Sagen. "Due to, what we consider, the service area's below-average income and high utility rates, we do not expect to raise the rating over the outlook's two-year period."
In May 2014, the city of Dadeville adopted a resolution authorizing the monthly payment of a portion of city sales tax revenue to the board for the payment of series 2012A and 2012B debt service.
A net waterworks and sanitary sewer system revenue pledge, including a portion of city sales tax revenue, secures the bonds.
