Standard & Poor's Ratings Services said it lowered its long-term rating and underlying rating on North Texas Municipal Water District's contract revenue debt, issued for its Panther Creek regional wastewater system, one notch to AA-minus from AA.
The outlook is stable.
The downgrade reflects Standard & Poor's opinion of the district's decreasing operating margins and reliance on nonrecurring developer contributions just to generate 1x fixed-charge debt service coverage (DSC).
In addition, Standard & Poor's has assigned its AA-minus long-term rating and stable outlook to the district's $61.435 million series 2015 contract revenue bonds, issued for its Stewart Creek West regional wastewater system.
"We could lower the rating again if operating margins were to deteriorate further, resulting in a deteriorating financial profile," said Standard & Poor's credit analyst Jose Razo. "Due to the growth-driven capital plan supporting on- and off-balance sheet debt over the next few years, we do not currently believe there is any upward rating potential within our two-year outlook period."
The rating reflects Standard & Poor's opinion of the general creditworthiness of Frisco, Texas' water and sewer system, as the system's sole participant.
