City’s utility bonds receive unexpected upgrade

The national Standard and Poor’s Ratings Services recently upgraded the bond rating on city of Marysville water and sewer revenue bonds from “AA” to “A+.”

  • Wednesday, July 2, 2008 3:18pm
  • News

MARYSVILLE — The national Standard and Poor’s Ratings Services recently upgraded the bond rating on city of Marysville water and sewer revenue bonds from “AA” to “A+.”

What made this bond upgrade unique was that the city did not seek it out, according to Community Information Officer Doug Buell.

City Finance Director Sandy Langdon said Standard and Poor’s contacted city officials to review whether or not large bonds, such as Marysville’s $48 million bond issuance in 2005, warranted a downgrade due to the nationwide problems with sub-prime mortgage loans.

In short, the answer was just the opposite.

“A review of our water and sewer revenue bonds found that our city’s utility is in good shape financially and the current economic outlook for our region is positive,” Langdon said.

According to information released by the city, Standard and Poor’s looked at debt service trends and other factors dating back three years. The results were positive, even as the city undertook a major expansion of its wastewater treatment plant, wrote Standard and Poor’s Credit Analyst Chris Morgan.

Equally important was the contribution of regular minor rate adjustments the city has undertaken since 2005, reflecting what the rating service felt was an active approach at ensuring that the city’s utility can continue to meet its financial obligations.

Again, according to the city, key rating factors included:

— Very strong debt service coverage, with some reliance on one-time charges associated with development.

— Modest capital needs with sufficient capacity as envisioned by city planners.

— A regular record of annual rate adjustments.

“The major benefit of the rating upgrade to the city is that it improves the ability for the city to market its bonds to financial institutions providing lower interest rates and lower bond insurance premiums,” Langdon said.

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