DALLAS — Moody's Investors Service downgraded Wichita Falls, Texas's $95.5 million of water and sewer debt two notches to A3 April 6, citing deteriorating financial performance and modest debt service coverage.
The outlook remains negative.
"The rating also considers the above average debt burden and additional debt the system supports," Moody's analyst Nathan Louder added.
With a population of 104,553, Wichita Falls is the seat of Wichita County on the Oklahoma border. The city is under exceptional drought conditions and began Stage 5 drought catastrophe restrictions on May 17, 2014.
To conserve water, the city began taking water straight from the waste treatment facility, sending it to the water treatment plant for cleaning, and then distributing it back into the water system. The city's main source of water comes from Lake Arrowhead, at only 24% capacity.
"The negative outlook reflects the system's weak liquidity and the region's harsh drought conditions that have resulted in limited water supply.
The system's revenue bonds, secured by a senior lien pledge of net water and sewer system revenues, were last rated AA-minus by Standard & Poor's in 2013.
