Fitch Ratings said it upgrades to AA from AA-minus Seacoast Utility Authority, Fla.'s $102.8 million water and sewer utility system revenue bonds, series 1989A, 2009A and 2009B (Build America Bonds), and $10.5 million water and sewer utility system refunding revenue bonds, series 2001.
The rating outlook is revised to stable from positive.
The bonds are secured by a first lien pledge of net revenues of the system and investment income.
The upgrade reflects the system's high liquidity levels and sound debt service coverage (DSC) levels, both of which typically outperform budget estimates. Liquidity is expected to decline as the city plans to finance 100% of the capital improvement plan (CIP) with
cash, but levels are expected to remain healthy.
While debt levels are high, they should decline to more favorable levels given no other debt issuances are planned for the next five years.
Rates remain very affordable and provide ample financial flexibility to the authority.
The authority recently successfully renewed its water use permit, which will provide the system with sufficient water supplies and treatment capacity to meet demand requirements for the next five years.