Moody's Investors Service said it has downgraded to Baa1 from A3 the rating on the city of Miller, S.D., Electric Enterprise's revenue bonds.
The Baa1 rating applies to $6.8 million in outstanding debt. The bonds are secured by a first lien on and pledge of the net revenues derived from the operation of the improvements. Debt service is expected to be paid from a surcharge on all customer accounts.
The downgrade to Baa1 reflects the systems narrow debt service coverage, a small and challenged system that has experienced a recent decline in customer base, and sufficient legal provisions. The rating also takes into account the system's healthy net working capital and liquidity level.
The negative outlook reflects Moody's belief that the system will be challenged to maintain revenues sufficient enough to pay debt service coverage from the surcharge alone.
