Standard & Poor's Ratings Services said it raised its long-term rating and underlying rating on Oneonta Utilities Board, Ala.'s utility revenue debt one notch to AA-minus from A-plus.
The outlook is stable.
The upgrade reflects Standard & Poor's opinion of the board's continued strong financial performance, evidenced by strong senior-lien and total debt service coverage and strong liquidity, which the rating service believes is sustainable due to a lack of additional debt plans.
"We believe that the system will likely continue to implement rate adjustments as necessary and that management will likely maintain, what we consider, strong debt service coverage due to its lack of additional debt needs. We also expect management to continue to adhere to its minimum cash reserve goal, allowing the system to maintain, what we view as, strong liquidity," said Standard & Poor's credit analyst Scott Sagen. "Due to, what we consider, the board's high utility rates and below-average economic indicators, we do not believe additional upward rating mobility exists over the outlook's two year period."
At the same time, Standard & Poor's assigned its AA-minus long-term rating and stable outlook to the board's $6.59 million series 2014 utility revenue bonds.
The board's water, sewer, and gas systems net revenue pledge secures the bonds. Officials plan to use series 2014 bond proceeds to refund the board's series 2006 bonds for cost savings. The rating service understands the board is issuing the series 2014 bonds on parity with its series 2004 state revolving fund loan bonds, 2009 bonds, and 2012 bonds. The board's series 2000 and 2001 state revolving fund loans bonds total $1.2 million, and they are subordinate to the series 2014 bonds.
