NEW YORK - Moody's Investors Service said it has assigned an A2 rating and a stable outlook to the Louisville and Jefferson County Metropolitan Sewer District, Ky.'s $180 million sewer and drainage system revenue bonds, series 2009C (federally taxable - Build America Bonds- direct payment).
Concurrently, Moody's has affirmed the A2 underlying rating on the district's $1.35 billion of previously issued parity debt and revised the outlook from negative to stable.
The bonds are secured by a gross revenue pledge (including special assessments, capacity charges, and connection fees).
The A2 underlying rating is based on the regionally important service area economy, adequate district financial position, and an above average debt level that is expected to continue to pressure operations given a sizable consent decree capital program.
The stable outlook reflects Moody's expectation that the system (MSD) will adjust rates or spending plans, including future capital, to ensure maintenance of financial margins and relative liquidity that approximates current levels.
The stable outlook also reflects Moody's expectation that the district's exposure to the short-term market, resulting from its sizable swap portfolio and BAN refinancing risk, will be manageable.
Proceeds of the current issue will fund MSD's sizable capital program.
