Standard & Poor's Ratings Services said it lowered its underlying rating on Mon Valley Sewage Authority, Pa.'s sewer revenue debt one notch to A-minus from A.
The outlook is stable. At the same time Standard & Poor's assigned its A-minus long-term rating and stable outlook to the authority's series 2015 bonds.
"The downgrade reflects the authority's weak total debt service coverage for unaudited fiscal 2014, as evidenced by the absence of a planned rate increase in 2014 to provide sufficient coverage for increasing annual debt service requirements," said Standard & Poor's credit analyst Scott Sagen. "In addition, we believe total debt service coverage will remain thin and lower than historical levels due to additional borrowing requirements related to the authority's long-term control plan and the loss of a leading customer in October 2014."
The authority's net sewer system revenue pledge secures the series 2015, 2013, 2012, and 2011 bonds. Officials intend to use series 2015 bond proceeds to refund the series 2011 and 2010 bonds for cost savings, and fund roughly $750,000 in capital improvements associated with phase II of the combined sewer overflow long-term control plan.
