S&P: Madera Irrigation District, CA Series 2016 Water Revenue Refunding Bonds Assigned 'A' Rating
"The rating reflects, in our opinion, the combination of a strong enterprise risk profile and a very strong financial risk profile," said S&P Global Ratings credit analyst Tim Tung.
The enterprise risk profile reflects our view of the district's:
Service area participation in the agriculture-based Madera County economy, Very low industry risk as a monopolistic service provider of an essential public utility, Practice of annually adjusting service rates to meet revenue requirements, andGood operational management practices and policies. The financial risk profile reflects our view of the district's:
Insufficient coverage for fiscal year 2015 although coverage metrics have historically been significantly stronger, Extremely strong liquidity position even following the use of cash reserves to reduce leverage in conjunction with the issuance of the series 2016 bonds, Vulnerable leverage position based on a debt-to-capitalization ratio of 74%, and Good financial management practices and policies. A strong enterprise risk profile and a very strong financial risk profile map to an indicative rating in our revenue debt criteria matrix of 'a+', however, we have applied a one-notch worsening peer adjustment to determine the final rating based on the district's insufficient coverage in fiscal year 2015 and uncertainty with respect to its plans for the Madera Ranch property.
The series 2016 bonds are being issued to refund the district's existing series 2008 bonds for annual debt service savings.