CHICAGO — Standard & Poor's revised its outlook on Springfield, Ill.'s City Water, Light & Power's electric revenue bonds to stable from negative.
The bonds are rated A.
"The stable outlook reflects our opinion of Springfield's improved coverage of fixed costs," said analyst Jeffrey Panger.
The rating is supported by the city's diverse economy with the state capital serving as a stabilizing presences and a solid customer base that exhibits little customer concentration. The bonds also benefit from solid debt service coverage based.
Weak results in 2011 and 2012 triggered a rate covenant violation. Standard & Poor's responded in 2012 to the violation by dropping its rating by two notches to the current level of A.
Credit weaknesses include Springfield's substantial carbon footprint.
"Although compliant with regulations governing sulfur, nitrogen, mercury emissions, and particulates, CWLP is still exposed to regulatory measures related to carbon dioxide emissions, the compliance costs of which could be substantial but have not been established," the report warned.
Other challenges include volatile surplus energy sales that expose CWLP to financial uncertainty and uneven financial operations, high debt levels, rates that have trended upward and are above average, and marginal liquidity.
The system has about $600 million of senior lien electric debt outstanding.
