S&P: Camrosa Water District, CA Refunding Revenue Bond Rating Raised To 'AA' On Revised Criteria; New Bonds Rated 'AA'
The rating action reflects the district's very strong enterprise risk profile and very strong financial risk profile, based on the application of our revised criteria, "Rating Methodology And Assumptions For U. S. Municipal Waterworks And Sanitary Sewer Utility Revenue Bonds," published Jan. 19, 2016 on RatingsDirect.
The enterprise risk profile reflects our view of the district's:Service area participation in the broad and diverse Ventura-Oxnard-Thousand Oaks metropolitan area economy, Very low industry risk as a monopolistic service provider of an essential public utility, Affordable service rates in the context of the service area's very strong income levels and a track record of annual rate adjustments, andComprehensive operational management practices and policies. The financial risk profile reflects our view of the district's:Very strong historical all-in coverage (averaging over 1.3x for the water enterprise and over 2.0x for the sewer enterprise, as calculated by S&P Global Ratings) that we believe is sustainable based on management's six-year financial forecast;Sound liquidity position with total unrestricted cash on hand of $11 million at the end of fiscal 2016 (unaudited);Manageable five-year capital plan that does not require additional debt issuance through fiscal 2022 following the issuance of the series 2016 bonds; and Robust financial management practices and policies. The bond proceeds will refund water and wastewater bonds outstanding for debt service savings, and also generate $6 million of new money proceeds to support upcoming capital needs of the water system.
"The stable outlook reflects our expectation that the district will continue to manage both water and sewer enterprises expenses, pass through rising imported water costs, and produce very strong debt service coverage and liquidity as it progresses through its capital improvement plan," said S&P Global Ratings credit analyst Chloe Weil.