CHICAGO – Lawrence, Indiana's waterworks utility lost its investment-grade rating after a three-notch downgrade from Standard & Poor's.
The rating agency lowered its rating on the city's 2007 waterworks utility revenue and refunding bonds to BB-plus from BBB-plus Nov. 9. The outlook is stable.
"The downgrade reflects Standard & Poor's assessment of the waterworks utility's recent financial performance, which it considers weak," the rating agency said.
The utility's operating and maintenance fund has recorded imbalances since 2010 with its cash balance shrinking to a negative $637,000 in fiscal 2014 from $1.6 million in 2009, according to S&P, an amount that represents negative 54 days' operating expenses, below a requirement in the waterworks utility bond ordinance to maintain at least a 60-day balance.
"We believe upward rating mobility would result from financial operations improving materially, although this action could take place beyond the two-year outlook period given that Lawrence would need to demonstrate a trend of sustained financial improvement," said analyst Gregory Dziubinski. "Conversely, absent clear evidence of steps that we believe would lead to a return to fiscal stability--which does not just stem but reverses financial profile degradation--we could still consider a further lowering of the rating within the outlook horizon."
The water system serves Lawrence, 10 miles northeast of downtown Indianapolis in Marion County.