Standard & Poor’s on Monday raised the city of Cocoa’s 2003 water and sewer revenue bonds to AA-minus from A.
The two-notch upgrade affected the city’s Series 2003 water and sewer bonds, of which $19.5 million is outstanding. The city’s total water and sewer bond debt at the end of fiscal 2008 was $63.3 million, including principal and interest due through 2038, Cocoa’s fiscal 2008 financial report said.
“The upgrade … reflects our view of management as conservative and experienced, and of the system’s strong financial position as evidenced by what we consider to be strong debt service coverage levels and good liquidity,” said analyst Richard Marino.
Other rating factors include the city’s access to the greater Brevard County economy, which offsets the shallowness of the local economy, and a manageable capital improvement program, Marino said.
A mitigating factor is the water and sewer system’s rates, which Standard & Poor’s considers high although they are competitive relative to the surrounding area.
The agency also placed a stable outlook on the city’s credit reflecting the expectation that Cocoa will continue to manage the combined system and its solid fiscal position while maintaining strong coverage ratios and a manageable CIP.
“System management’s demonstrated willingness to increase user rates adds further stability to the rating in our opinion,” Marino wrote.
The upgrade comes as the city is planning a $30 million bond sale to fund system improvements and refund all or portions of Series 1999 and 2003 water and sewer bonds.
Dunlap & Associates Inc. is Cocoa’s financial adviser. Gardnyr Michael Capital Inc. is underwriter for the upcoming deal. Bryant Miller Olive PA is bond and disclosure counsel.
Cocoa is in central Brevard County on Florida’s eastern coast about 47 miles from Orlando.