Standard & Poor's Ratings Services said it raised its rating by two notches, to CCC-plus from CCC-minus, on Aliceville Governmental Utilities Services Corp., Ala.'s series 2011 bonds, issued for its Federal Bureau of Prisons project.
The rating remains on CreditWatch, with the implications revised to developing from negative. The rating has been on CreditWatch since Aug. 19, 2013.
"The upgrade is based upon our understanding that the bond trustee has received sufficient monies from the GUSC to make the interest payment on the bonds in full and as scheduled," said Standard & Poor's credit analyst Theodore Chapman. An interest payment of approximately $193,000 was due on Feb. 1, 2015. By Standard & Poor's calculation, the debt service reserve fund (DSRF)'s current balance is less than $55,000.
Since August 2013 and at each six-month debt service payment date since then, the GUSC drew on the DSRF to make timely and full payments as they became due.
The need to draw from the DSRF stemmed from a rate dispute between the GUSC and the FBOP. GUSC had issued the 2011 bonds to fund the construction of water and sewer facilities for a federal correctional institution near the city of Aliceville.
