DuPage County’s waterworks and sewage revenue bond program won an upgrade to AA-plus from AA thanks to the strength of debt service coverage ratios that are expected to remain steady following a rate increase.
The review of the credit was conducted in conjunction with the county’s new-money and refunding sale of $15 million of waterworks and sewage project first- and second-lien bonds. Standard & Poor’s upgraded the first-lien and second-lien credits to AA-plus while Fitch Ratings upgraded just the first lien to AA-plus. The junior lien is rated AA by Fitch.
Other factors that support the high rating include the county’s strong economy and location just west of Chicago, strong liquidity, and ample sewer treatment capacity with minimal additional debt needs, Standard & Poor’s wrote.
“We expect that the system will generate net revenues sufficient to maintain debt service coverage at strong levels and that future debt needs will be moderate,” Standard & Poor’s analyst John Kenward wrote. Proceeds of the upcoming sale will refund debt sold in 2003 and provide $14 million in new money for capital improvements. The system has $3.8 million of existing debt.
Fitch attributed the senior-lien upgrade to “modifications to the bond indenture that strengthen the rate covenant, the system’s mature demand profile, solid financial performance, limited capital needs, low debt, and conservative debt service rate covenants.
DuPage County’s Department of Public Works operates the system and has responsibility for water and sewer service not offered by other local governments within the county. The system serves a population of about 160,000, about 17% of the county. It operates 11 electrically powered pumping stations with a total capacity of 8.6 million gallons per day. DuPage also owns and operates three sewage treatment facilities