Oct. 26, 2011
As part of a credit review related to refinancing, Standard & Poor’s today maintained a AAA bond rating for the Phoenix Water System. Only 7.7 percent of water and wastewater credits rated by S&P in the United States have a AAA credit rating (89 of 1,150).
“Phoenix water rates are the eighth lowest among the 20 largest U.S. cities and this is directly attributed to our AAA credit rating,” said Mayor Phil Gordon. “A strong credit rating for these bonds means the lowest possible borrowing costs and lower water rates for Phoenix residents and businesses.”
Standard & Poor’s reported that the city maintained the AAA credit rating because of low-cost water supplies, ample treatment capacity and affordable rates. The stable outlook reflects S&P’s expectation of continued proactive management, which should result in stable, if not improving, coverage levels, coupled with consistently high liquidity levels.
“Over the next two months, the city will be refinancing both water and wastewater system debt, reducing debt service payments by more than a combined $40 million for the two systems,” said Councilman Bill Gates, who chairs the City Council Finance, Efficiency and Innovation Subcommittee. “In May, the city’s AAA rated Senior Lien Excise Tax bonds were restructured and refinanced to generate $44.5 million in savings over the next two years and today’s credit rating announcement will allow us to generate similar savings.”
"Because of strong financial management, this city has maintained a AAA credit rating for four of the city’s credits, which means significant savings for city taxpayers, even during a down economy,” said City Manager David Cavazos. “Bottom line, these outstanding ratings mean lower interest rates which in-turn save the city borrowing costs and translate to lower rates for our residents.”
In addition to the Wastewater System and Water System bond, the city maintains a AAA rating from S&P on its General Obligation bonds and Senior Lien Excise Tax bonds. S&P assigns a Financial Management (FMA) score to all credits and assigned Phoenix the highest category of "strong," a major factor for the AAA credit ratings held by the city of Phoenix.