LOS ANGELES — Moody's Investors Service upgraded to Aa3 from A1 Redmond, Oregon's water enterprise revenue bonds and removed the bonds from review based on a change in the rating agency's methodology for U.S. municipal utility revenue debt.
The upgrade that came in a Feb. 2 report affected $3.3 million in debt.
The city-owned water utility provides retail water distribution to Redmond, population 26,590.
The rating was placed under review for possible upgrade on December 15 due to Moody's adoption last year of changed methodology in the sector, according to the report.
Moody's cited the water system's consistently robust financial position, which includes ample liquidity and strong debt service coverage, for the upgrade.
"Management maintains prudent financial and capital plans, and demonstrates sound rate setting practices that include annual water rate increases," analysts said in the report.
The utility's assets also remain in good condition as a result of ongoing investments in system maintenance and legal provisions are satisfactory, according to the report.
Moody's said it doesn't typically assign outlooks to local government credits with this amount of debt outstanding.
Factors that could create upward pressure on the rating include substantial and sustainable system growth and economic diversification and appreciation in socioeconomic measures. Downward pressure could be caused by deterioration of the utility's financial position or a reluctance to raise rates or invest in capital maintenance.