NEW YORK - Moody's Investors Service said it downgraded to A3 from A1 the rating on the city of Ketchum, Idaho's sewer enterprise revenue bonds. The bonds are secured by the net revenues of the city's sewer system.
The downgrade to A3 primarily reflects the enterprise's weakened financial position evidenced by declines in debt service coverage and liquidity levels that were driven by cash funding one time capital projects.
The A3 rating also considers the small customer base located in an affluent recreational touristic service area, and manageable debt ratio with average amortization of principal.
Concurrently, Moody's assigns a negative outlook reflecting the expectation cash margins will further deteriorate due to continued plans to cash fund capital needs.
The rating also factors in a fully funded debt service reserve, funded at MADS, and a somewhat weak rate covenant level that requires the system maintain net revenues of no less than 1.25 times average annual debt service coverage.