Standard & Poor's Ratings Services said it has raised its underlying rating on Portland Water District, Maine's water system revenue bonds to A-plus from A-minus.
At the same time, Standard & Poor's assigned its A-plus rating to the district's series 2013 water system revenue bonds. The outlook is stable.
"The outlook revision reflects what we view as strong debt service coverage and consistently good liquidity levels," said Standard & Poor's credit analyst Joseph Pezzimenti.
The rating reflects the following credit strengths: a stable service area economy, which has wealth and income levels that are above average for the state and the nation; sound system operations, with a virtually unlimited water supply; strong debt service coverage (DSC) that should continue, assuming rate increases are implemented, and a good liquidity position also expected to continue; and good financial flexibility from retail water rates considered affordable relative to service area wealth levels and relative to those of other utilities in the state.
Offsetting credit weaknesses include: the lack of autonomy in raising water rates because the Maine Public Utilities Commission must approve all increases; and additional debt needs, which could pressure DSC, absent future rate increases.
Bond proceeds will finance the installation of an ultraviolet treatment system and upgrade of the ozone system at the district's water treatment facility in Standish.
The PWD provides water to three cities and seven towns within the Portland metropolitan area, reaching nearly 200,000 people.
The stable outlook reflects the expectation that water system operations will remain stable with strong DSC and good system liquidity. The rating agency could lower the rating within our two-year outlook period if the system's DSC or liquidity position deteriorates. It doesn't expect to raise the rating in the next two years, given the PWD's borrowing needs.
