CENTENNIAL (S&P Global Ratings) Feb. 6, 2018–S&P Global Ratings raised its long-term rating to ‘AA+’ from ‘AA’ on Las Vegas Valley Water District, Nev.’s outstanding limited-tax general obligation (GO) water revenue bonds. At the same time, S&P Global Ratings raised its issuer credit rating on the district to ‘AA+’ from ‘AA’. In addition, S&P Global Ratings raised its long-term rating to ‘AA+’ from ‘AA’ on the district’s outstanding parity obligations additionally secured by the net revenues of the district, and parity debt additionally secured by pledged revenues of Southern Nevada Water Authority (SNWA). S&P Global Ratings also affirmed its ‘A-1+’ short-term rating on the district’s limited-tax GO commercial paper (CP) notes. Finally, S&P Global Ratings assigned its ‘AA+’ long-term rating to the district’s series 2018B limited-tax GO water revenue refunding bonds, additionally secured by pledged revenues of SNWA. The outlook on all ratings is stable.
The series 2018B bonds are being issued to refinance the district’s series 2008B GO limited-tax (additionally secured by SNWA) bonds outstanding for annual debt service savings.
"The rating actions reflect our view of the district’s continued economic growth and improved property wealth over the last several years," said S&P Global Ratings credit analyst Michael Parker. "The rating actions also reflect the district’s maintenance of strong cash reserves and good all-in coverage metrics recently."
The ‘AA+’ GO rating reflects our opinion of the district’s:
Statutory authority to levy an ad valorem tax on property owners in the district’s service area, which provides substantial financial flexibility;
Strong economic fundamentals, with a tax base that is virtually coterminous with the broad and diverse Clark County and is additionally supported through greater employment diversity in recent years and strong income and wealth indicators;
Critical role as the primary water utility serving Nevada’s largest metropolitan area;
Strong financial management practices and policies; and
Strong liquidity position supported by an adopted reserve policy that we believe will be maintained going forward.
These strengths are partially offset by the district’s significant capital needs and already moderately high leverage based on a debt-to-capitalization ratio of 76% in 2017.
The stable outlook reflects our view of the strength of the local and regional economy within the Las Vegas-Henderson-Paradise metropolitan statistical area, supported by continued property tax wealth growth in recent years. The stable outlook also reflects the district’s stable customer base and strong liquidity and reserves. The outlook reflects our expectation that the district will maintain its strong financial position and at least good all-in coverage, despite significant capital needs in the near term. We do not expect to change the ratings over the next two years.
Although not expected, we could raise the ratings if the district’s all-in coverage levels significantly improve in a manner that we believe would be sustainable.
Should district revenue collections deteriorate or near-term debt issuances weaken coverage to levels no longer in line with those of similarly rated peers, we could lower the ratings.
certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on the S&P Global Ratings’ public website at www.standardandpoors.com. Use the Ratings search box located in the left column.