Standard & Poor's Ratings Services said it raised its long-term ratings by one notch, to AAA on Knoxville Utilities Board (KUB), Tenn.'s water division revenue debt.
The outlook is stable.
The agency also assigned a AAA rating and stable outlook to the city of Knoxville's series AA-2014 water system revenue bonds, issued for KUB.
"The upgrade is based on the system's extremely strong financial risk profile, which we view as sustainable over time after reviewing management's long-term financial forecast," said Standard & Poor's credit analyst Theodore Chapman. The upgrade affects about $123 million of debt.
Although the water division is still in the midst of its "Century II" system rehabilitation projects, the total capital improvement plan of $247 million through fiscal 2024 has identified only $110 million of additional debt.
Moreover, the governing board has pre-approved rate adjustments through fiscal 2017, and has a strong history of long-term operational and financial planning that is predicated on conservative and realistic assumptions.
KUB provides retail water service to about 78,300 customers across a 178-square-mile service area that includes Knoxville and the majority of Knox County.
