Omaha Agency Falls

Standard & Poor’s dropped its rating on the Omaha Metropolitan Utility District to A from A-plus due to decreasing debt service coverage levels, the ratings agency said last week.

“The downgrade is attributable to three straight fiscal years of operations with less than one times debt service coverage and significant reductions in the unrestricted cash and investment balance to less than $500,000 on Dec. 31, 2010,” analyst Scott Garrigan said in a release on the downgrade.

“Management attributes these trends both to actual usage being below budget and to rates that have not been high enough to keep up with cost increases,” he said.

The district provides gas and water to triple-A rated Omaha and nearby municipalities. It has 200,000 customers.

The outlook is stable at the lower rating in consideration of the district’s projections that coverage will increase to at least 1.3 times its fixed costs through 2016, Garrigan said.

If those projections fail to pan out, it could lead to another downgrade. But the district could be upgraded if it continues to improve its financial position, he added.

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Nebraska
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