S&P Global Ratings Upgrades City Enterprise Revenue Bonds
Standard & Poor’s (S&P) Global Ratings, the world’s leading provider of credit ratings, recently completed a rating review of the City of Norco’s 2009 Enterprise Revenue Bonds and upgraded the underlying rating (SPUR) from “A” to “AA-” while affirming the stable outlook of the Bonds. This upgrade represents the financial industry’s strong confidence in the City’s finances and operational capacity.
The recent re-rating represents a significant two-step upgrade and reflects strong enterprise profile and low risk for the City’s outstanding 2009 Enterprise Revenue Bonds. The rating review by S&P was conducted as part of the City’s financing plan, approved by the City Council on November 6, 2019, to issue 2019A Enterprise Revenue Refunding Bonds to finance the acquisition and construction of certain improvements to the City’s water and sewer systems, and to refinance the outstanding 2009 Bonds to significantly reduce the City’s debt service costs. This refinancing plan is projected to provide debt service savings of nearly $13 million to the City during the remaining 20 years of the bonds that are to be refunded.
In their ratings upgrade, S&P cited many positive factors regarding the City and the finances of the water and sewer systems, including the following:
• Rising strength in debt service coverage ratios since 2014
• Very strong liquidity position, represented by about $19.1 million of unrestricted cash and investments for the water and sewer systems
• Solid financial management assessment, represented by formalized practices and policies that guide long-term financial and capital planning
• Moderate debt-to-capitalization ratio
• Affordable water and sewer rates given the City’s very strong economic indicators
• Good operational management assessment, evidenced by sufficient water supply to meet long-term demand and rights to adequate sewage treatment capacity.
For more information regarding S&P’s credit rating of the City’s Enterprise Revenue Bonds, please see the attached report.
The “AA-” designation awarded to these bonds is an exceptionally high rating for public agency debt and reflects considerable confidence, not only the underlying debt, but the City’s overall finances.
For more information, contact the City of Norco at (951) 270-5623 or firstname.lastname@example.org.
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