Standard & Poor’s last week raised its underlying rating on the Western Carolina Regional Sewer Authority’s outstanding revenue bonds to AA from AA-minus. The outlook is stable.
The authority had $274 million of outstanding revenue bonds, including principal and interest, through 2026, according to its fiscal 2007 financial report.
“The upgrade reflects the authority’s continued financial strength, while meeting the capital needs of the system,” Standard & Poor’s analyst Linda Yip said in a report.
Yip said the rating also reflects the authority’s continued growth in its service area, above-average wealth and income levels, maintenance of strong system liquidity, and healthy debt service coverage from net revenues of tap and connection fees.
Fiscal 2007 ended with more than 1,000 days of unrestricted cash on hand and coverage from all available revenues made for strong 2.19 times coverage of annual debt service, according to Yip. Excluding revenue from new account fees, coverage was lower, but still strong at 1.79 times.
As part of its capital improvement plan, which identified $125.4 million in capital projects for the 2009-2012 period, the authority is considering issuing about $40 million in revenue debt in December.
The sewer agency’s service area primarily covers Greenville County, along with small portions of Anderson, Laurens, and Spartanburg counties. It had 115,942 customers in 2007. Growth in the customer base has averaged about 2.9% annually during the past five years — a trend management projects will continue over the next few years, Yip said.
Greenville County serves as the service, retail, and manufacturing hub for northwestern South Carolina. Greenville Hospital System, the county’s school district, and Michelin NA are the county’s largest employers, with a total of more than 4,000 employees.
Tax base growth in the county is strong and increased by more than 160% in the past 10 years. In fiscal 2007, market values totaled $28.8 billion. Wealth and income levels for 2007, as measured on a per-capita effective buying income basis, were at 98.8% of the national level.
“The stable outlook reflects the strength of the authority’s financial position and its ample system capacity,” Yip said. “Additionally, management is expected to continue maintaining healthy debt service coverage as the authority continues to address its ongoing capital plans.”
Moody’s Investors Service rates the sewer agency’s revenue bonds Aa3.