Standard & Poor’s said it has lowered its rating on Portage, Mich.’s public utility revenue bonds Series 2005 to A from A-plus, citing the systems’ low cash balances, which management projects will decrease to a negative $3 million by the end of fiscal 2010, and to the city’s insufficient debt service coverage.
Though senior-lien debt service coverage is strong, coverage of all debt service being paid from system revenues, including junior-lien and general obligation debt, has been significantly below 1x for the past three years, and is projected to remain below 1x for fiscal 2010. The rating is stable.
The rating also reflects the city’s rate flexibility, due to its ability to raise rates without outside agency approval, adequate legal provisions and strong service-area economy.
