Standard & Poor's Ratings Services said it lowered its rating on Carroll County Public Water Supply District No. 1, Mo.'s water revenue-backed debt to A-minus from A.
The outlook is stable.
At the same time, it assigned its A-minus rating, and stable outlook, to the district's waterworks refunding revenue bonds, series 2014A and taxable 2014B bonds.
"The downgrade reflects the district's adequate financial position that will require higher rates as the debt service increases annually," said Standard & Poor's credit analyst Corey Friedman.
Credit factors supporting the rating include Standard & Poor's opinion of the district's: overall stable financial position, with sufficient coverage of annual debt service and adequate liquidity on a nominal basis; ample capacity, with additional capacity expected with the new water treatment plant; and high debt to plant ratio and limited capital needs.
The district's pledge of net revenues of the waterworks system secures the bonds. Bond proceeds will refund the district's 2009 bonds for interest cost savings. The district plans to maintain a debt service reserve fund at the standard three-prong test. Assuming the district is successful in refunding its bonds, this will be its only debt outstanding.
The stable outlook reflects the expectation that the district will continue to maintain at least adequate coverage of debt service and liquidity, particularly as it repays its debt. During the two-year outlook horizon, downward pressure could result if the district were to experience a trend of revenues insufficiently covering operating expenditures, thus reducing liquidity levels even further. However, given the rising debt service schedule, the agency believes the district will need to raise its rates.
