NEW YORK - Standard & Poor's Ratings Services said it has lowered its long-term rating and underlying rating (SPUR) on Kentucky Rural Water Finance Corp.'s public projects revenue bonds to A-plus from AA-minus following the release of updated criteria.

The downgrade reflects the application of Standard & Poor's revised long-term municipal pool criteria, especially as it relates to the level of reserves relative to bonds outstanding.

The pool has $11.6 million of reserves compared with $185.3 million of bonds outstanding.

Standard & Poor's also assigned its A-plus long-term rating to the corporation's $18.05 million series 2012D public projects revenue bonds. The outlook on all the ratings is stable.

The ratings reflect the following characteristics: a strong enterprise risk profile, given that the pool is managed by a nonprofit, nonstock public corporation and the loan program has no geographic concentration, in Standard & Poor's view; a strong financial risk profile, with loss coverage score, operating performance, and financial policies consistent with this profile; and exceptionally low loan delinquencies since 1995, when the program sponsor began offering lending programs to its members.

"We expect that the level of overcollateralization will remain consistent with the rating level and the other program features will not deviate from historical trends and practices. Within the two-year outlook horizon, we could lower the rating if reserves become insufficient for the rating level, in our view, or any other program factors negatively affect the enterprise or financial risk profiles," said Standard & Poor's credit analyst Scott Garrigan. "Conversely, we could raise the rating if our view on either the financial or enterprise risk profile changes. In our opinion, the most likely factor that would move the rating upward would be an increase in the level of overcollateralization arising from non-debt-funded reserves or other available sources," he added.

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