SAN FRANCISCO - Portland, Ore. is planning to sell $84.8 million of triple A-rated revenue bonds in a competitive offering on Dec. 4 for its water system.
The revenue bonds will be secured by a first lien on net revenues of the city's water system. The bonds will have maturities in 2015 through 2039.
Hawkins Delafield & Wood LLP is serving as bond counsel and Public Finance Management, Inc. is financial advisor.
"The Aaa rating reflects the enterprise's strong credit characteristics that include a large metropolitan service area, ample supply of high quality water, sound management with strong operating policies, and a sizable debt burden that is supported by consistent rate increases," analysts at Moody's Investors Service said in a report.
Moody's is the only credit rating agency that rates the bonds.
Credit strengths include the large and stable metropolitan service area of Portland, continued willingness to regularly increase user rates to support debt and operations, and consistently strong debt service coverage levels.
Challenges include anticipated and significant additional debt issuance related to regulatory compliance and modest declines in demand for water.
"The stable outlook reflects Moody's expectation that the enterprise will continue to demonstrate strong operating performance," analysts said.
Proceeds will go toward the water system's capital improvement plan, which includes projects to improve existing facilities and roads in the watershed and improvements to groundwater facilities, water treatment projects, and approximately $239 million for improvements to the distribution system.
Moody's also affirmed the Aaa rating on the city's $318.5 million outstanding first lien water bonds, and the Aa1 rating on the city's $232.7 million of second lien water revenue bonds outstanding.
The city-owned water system has supplied domestic drinking water to residents of the Portland area for more than 100 years and is the largest supplier of domestic water in Oregon.
Almost one-quarter of the state's population receive water from the city's water system.
