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Bristol Virginia Combined Utility Authority, VA -- Moody's upgrades BVU Authority, VA's issuer rating to Aa3

·11 mins read

Rating Action: Moody's upgrades BVU Authority, VA's issuer rating to Aa3

Global Credit Research - 03 Sep 2020

New York, September 03, 2020 -- Moody's Investors Service has upgraded Bristol Virginia Combined Utility Authority, VA's (BVU) issuer rating to Aa3 from A1. The authority does not have any rated debt outstanding.

RATINGS RATIONALE

The authority's issuer rating is based on our assessment of the authority's net revenue pledge; no rated debt is currently outstanding with this security. The upgrade to Aa3 reflects the authority's sale of its broadband system in fiscal 2019 and the subsequent defeasance of outstanding revenue bonds. Following the defeasance, the authority does not have any revenue bonds outstanding. The rating also incorporates the system's sound liquidity position, ample capacity across all systems and manageable debt plans and capital needs.

We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action. We do not see any material immediate credit risks for BVU. However, the situation surrounding coronavirus is rapidly evolving and the longer term impact will depend on both the severity and duration of the crisis. If our view of the credit quality of the authority changes, we will update the rating and/or outlook at that time.

RATING OUTLOOK

Outlooks are not typically assigned to local governments with this amount of debt outstanding.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

- Service area growth and improved income levels

- Increases in liquidity

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

- Significant increase in debt or capital needs

- Declines in liquidity

LEGAL SECURITY

The issuer rating is based on the implied net revenue pledge of BVU.

USE OF PROCEEDS N/A PROFILE

BVU was established as an independent authority in July 2010 by the General Assembly of the Commonwealth of Virginia (Aaa stable). The utility had previously operated as a consolidated enterprise of the City of Bristol (A3) since 1951, although the electric system was established in 1945.

The authority provides electric, water and wastewater services to over 65,100 accounts in an 848 square-mile area that includes the City of Bristol and portions of various surrounding counties.

METHODOLOGY

The principal methodology used in this rating was US Municipal Utility Revenue Debt published in October 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1095545. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Lauren Von Bargen Lead Analyst Regional PFG Northeast Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Robert Weber Additional Contact Regional PFG Northeast JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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