S&P: Omaha Metropolitan Utility District, NE Water Revenue Bond Rating Raised To 'AA-' On Application Of New Criteria
"The upgrade reflects application of our new criteria and is supported by our opinion of the district's very strong enterprise risk and financial risk profiles, which we expect to be sustained for the next two years," said S&P Global Ratings credit analyst Oladunni Ososami. The rating also reflects our view that despite recent improvements, the system's longer term historical trend of varied financial results, as well as liquidity, remains lower than similarly rated peers, which limits the rating.
We view the legal provisions for the bonds as adequate and credit neutral. A pledge of the district's net water revenues secures the bonds.
Omaha Metropolitan Utility District provides water and gas services to Omaha and other nearby communities, including the cities of Bellevue, Waterloo, Bennington, LaVista, and Ralston in Nebraska and Carter Lake, Iowa, as well as the Papio?Missouri Natural Resources District. The district spans approximately 241 square miles and serves more than 200,000 customers.
"The stable outlook reflects our expectation that within the two-year outlook horizon, the district will continue to take appropriate measures to strengthen its financial profile," added Ms. Ososami, "including improving unrestricted cash to its target level and adequately addressing its capital needs, while maintaining currently strong all-in debt service coverage."
While unlikely, within the outlook period, if the district's liquidity position improves significantly and is consistently sustained while it addresses its capital needs as scheduled, we could raise the rating. Conversely, the rating could face downward pressure if future financial metrics are not as strong as the projections indicate, or if the district can't sustain its current liquidity.