Standard & Poor's Ratings Services said it raised its long-term rating and underlying rating to AA-plus from AA on Tulsa Metropolitan Utility Authority (TMUA), Okla.'s utility revenue debt.
The outlook is stable.
"The upgrade reflects our view of the system's strong revenue bond debt service coverage and liquidity position, along with what we view as manageable capital needs," said Standard & Poor's credit analyst James Breeding. Management is still developing the comprehensive water plan, but the financial projection for the next five years indicates a continuation of high debt service coverage (DSC) while the authority addresses system rehabilitation needs.
Specifically, the ratings reflect the system's: strong financial performance, with strong DSC of more than 2.0x, and strong liquidity, with cash at fiscal 2013 year-end equal to about 280 days of operating expenses; ample raw water supply and treatment capacity; management's ability, and willingness, to raise rates as required to preserve strong financial metrics; and the system's low debt burden and manageable capital needs.
The credit strengths are partially offset by the adequate income levels.
The stable outlook reflects the expectation that TMUA will continue to raise rates as necessary to maintain strong DSC and liquidity. Although it does not anticipate any material changes during the two-year outlook period, S&P could take a negative rating action if the system's DSC diminishes materially, or if unrestricted liquidity is significantly drawn down while addressing its capital needs.
