Moody's Assigns Aa1 to Macon Water Authority's W&S Rev. Bonds, Ser. 2020B; outlook stable
Monday, August 31st, 2020
Moody's Investors Service has assigned a Aa1 rating to Macon Water Authority's (GA) $20.5 million Water and Sewer Revenue Bonds, Series 2020B. We have also affirmed the Aa1 rating on the authority's outstanding parity debt. The outlook is stable.
RATINGS RATIONALE
The Aa1 long-term rating reflects the system's sound financial position, which is supported by multi-year rate increases and financial planning and conservative budgeting. The service area remains an economic hub for central Georgia. The authority's debt burden will remain manageable given the absence of substantial future debt plans.
We regard the coronavirus outbreak as a social consideration under our ESG framework, given the substantial implications for public health and safety. The utility system is not susceptible to immediate material credit risks related to coronavirus. The longer-term impact will depend on both the severity and duration of the crisis. The situation surrounding coronavirus is rapidly evolving. If our view of the credit quality of the district changes, we will update the rating and/or outlook at that time.
RATING OUTLOOK
The stable outlook reflects the expectation that the authority will maintain sound debt service coverage and liquidity levels given multiyear planning, including annual rate increases, and conservative budgeting practices. The outlook also incorporates the expectation that the service area will experience moderate growth over the mid-term due to industrial development.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-Growth and diversification of service area
-Increased cash reserves and debt service coverage
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-Substantial increases in leverage beyond current expectations
-Declines in current strong financial metrics
LEGAL SECURITY
The bonds are secured by a net revenue pledge of the system.
USE OF PROCEEDS (FOR NEW ISSUES)
Proceeds of the Series 2020B bonds will be used for system upgrades.
PROFILE
Located in central Georgia approximately 80 miles south of the City of Atlanta (Aa1 stable), MWA is the principal provider of water and sewer service to Macon-Bibb County Consolidated Government (A1 stable). In fiscal 2018, the water and sewer system provided retail service to 49,098 water customers and 40,125 sewer customers within the consolidated government, and served additional customers through wholesale contracts with Monroe and Jones counties and the City of Byron.
