NEW YORK - Standard & Poor's Ratings Services said it has raised its long-term rating on St. Clair, Mich.'s sewage system bonds to A-minus from BBB, based on the district's improved financial performance and strong coverage of its revenue bond debt service. The outlook is stable.
The A-minus rating further reflects Standard & Poor's opinion that: the system's liquidity has improved to levels it considers good; the system has low leverage, with limited capital needs; and residents have good income and strong wealth levels.
These strengths are tempered by the system's: history of decreasing cash balances due to its insufficient all-in debt service coverage; and a local economy that has suffered from the loss of major utility customers and employers, leading to a high unemployment rate and decreased utility revenues.
"We expect that the system will maintain adequate senior-lien debt service coverage and adequate liquidity," said Standard & Poor's credit analyst Adam Watson.
The net revenues of the sewage system secure debt service on the bonds. The city has other outstanding debt that is paid for, but is not secured by, the revenues of the system.
The system serves an estimated population of 5,771 in the city of St. Clair (AA GO debt rating). The city is located in St. Clair County (AA GO debt rating) and is on Michigan's southeastern border with Canada. The city is approximately 30 miles north of Detroit and 10 miles south of Port Huron.
