Moody’s Investors Service cut the Camrosa Water District, Calif.’s water and sewer system revenue refunding bonds, Series 2001, to Baa1 from A2.
The downgrade primarily reflects the district’s weakened financial position and likely continued below-average debt service coverage levels. The rating also incorporates the district’s wealthy but concentrated customer base, and relatively weak legal covenants. The bonds are secured by the district’s senior pledge of net water and sewer revenues.
Moody’s expects the district’s weakened financial position will improve given new management and plans to provide adequate debt service coverage levels.
In fiscal 2005 and 2006, the district’s financial position was weakened by maintenance of low rates coupled with increasing water supply costs and lower than expected revenues due to wet weather.
