Standard & Poor's Ratings Services said it raised its rating to A-plus from A on Palm Coast, Fla.'s utility system revenue-secured bonds.
At the same time, Standard & Poor's assigned its A-plus rating to the city's 2013 utility system and improvement and refunding bonds. The outlook on all ratings is stable.
"The upgrade reflects recent adopted rate increases, above the automatic inflationary rate, which we believe will lead the city to maintain at least good coverage levels of total debt service and further cushion the combined utility's financial position in the event of any economic downturns in the city," said Standard & Poor's credit analyst Corey Friedman.
The rating reflects: the service area's location within the Daytona Beach, Fla. metropolitan statistical area; a primarily residential customer base that grew steadily over time but that weakened during the recent economic recession and is now showing signs of improvement; adequate historical coverage of debt service on an all-in basis and improving liquidity levels that had declined in recent years; and the city's rate-setting autonomy.
Partially offsetting credit considerations are a relatively high debt to plant ratio with additional debt needs and rising rates, in respect to the underlying income levels.