S&P: Midway Sewerage Authority, PA's 2016 Revenue Bonds Rated 'A'; Outlook Stable
We base the rating on what we consider the combination of a strong enterprise risk profile and a strong financial risk profile.
"The rating also reflects what we view as the system's strong economic and strong financial metrics," said S&P Global Ratings credit analyst Scott Winrow.
Bond proceeds will refund the authority's series 2005 Rural Utility Service notes and pay the costs of issuance.
The authority serves approximately 1,400 residences and businesses in Northern Washington County covering Midway Borough, and portions of Smith Township, Mt. Pleasant Township, Cecil Township, and Robinson Township. The population is primarily residential and very diverse. In our view, income levels are slightly below average, with median household effective buying income at 91% of the national level. County unemployment is at 6.7% as of July 2016, higher than the national rate of 5.1%.
The stable outlook reflects our expectation that management will maintain strong liquidity and debt service coverage (DSC). Over the next two years, we do not expect to raise or lower the rating based on these factors.
If system operations and rate increases lead to significantly stronger coverage levels and cash levels are stable, we could raise the rating.
If DSC falls to and remains at lower levels or if unrestricted cash is significantly drawn down to fund capital plans, we could lower the rating.