Standard & Poor’s on Monday raised its rating on Huntsville’s water system revenue warrants one notch to AA-plus from AA based on continued strong economic development in the system’s service area, strong management with demonstrated rate increases, and improving liquidity.
The higher rating affects about $14 million of outstanding debt and comes with a stable outlook.
The new rating reflects the system’s expanding customer base characterized by above-average wealth and income levels, said a report by Standard & Poor’s analyst Edward McGlade. The system offers exceptionally low water rates compared with the rates of regional and national peers, resulting in strong rate-setting flexibility. It has enjoyed solid financial performance that has generated sound debt service coverage, and the capital improvement program is manageable
“We think the utility’s sound financial performance, solid operations, maintenance of low water rates, and emergence as a regional water supplier to other area retail providers will continue,” McGlade said in a news release. “Management’s ability to continue strong planning to ensure system stability is also an important factor for rating maintenance.”
The upgrade comes ahead of the city’s planned sale of $44.9 million of water system revenue warrants, which are similar to bonds. Standard & Poor’s assigned a AA-plus to the upcoming sale. No other details were immediately available.