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Greenville (City of) SC Water Enterprise -- Moody's affirms the City of Greenville Waterworks System's (SC) Aaa Revenue Bonds; outlook stable

·12 min read

Rating Action: Moody's affirms the City of Greenville Waterworks System's (SC) Aaa Revenue Bonds; outlook stableGlobal Credit Research - 16 Feb 2021New York, February 16, 2021 -- Moody's Investors Service has affirmed the Aaa rating on the City of Greenville Water Enterprise, SC's water revenue bonds. A stable outlook has been assigned. This rating action impacts $13.95 million of rated water revenue debt outstanding.RATINGS RATIONALEThe Aaa rating reflects the system's growing customer base that is driving increasing revenue and very healthy coverage without needing to tap the system's unlimited rate setting authority, ample system capacity, prudent financial management and capital planning. The rating also considers a somewhat small system size (O&M) and income levels that trail medians relative to other highly rated utilities.RATING OUTLOOKThe stable outlook is based on our expectation that debt service coverage and liquidity will remain healthy given the system's strong service area and prudent fiscal management. The debt ratio is also expected to remain moderate given limited outstanding capital needs.FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Significant declines in debt service coverage and liquidity- Substantial increase in the debt ratioLEGAL SECURITYThe bonds are payable from and secured by a pledge of and lien on the net revenues of the water system.The commissioners of the system have covenanted to charge and collect rates to maintain the sum of net revenues will be equal to at least 1.25 times coverage of debt service for all outstanding bonds. An additional bonds test states that the average net revenues for the two fiscal years immediately preceding the fiscal year in which the bonds are to be issued will be equal to at least 1.25 times maximum annual debt service on all outstanding debt. The board of commissioners have under the bond ordinance set a debt service reserve requirement equal to the lesser of the standard three prong test on the Series 2010 bonds and debt service reserve funded with cash at a fixed $1.4 million for the Series 2012 bonds. By commission policy, the system exceeds the covenant and maintains a cash-funded debt service reserve fund equal to 1.75x average annual principal and interest.PROFILEGreenville Water Enterprise is responsible for providing water treatment and distribution to most of Greenville County (Aaa stable) and portions of Anderson (Aa2), Pickens (Aa2) and Laurens counties in northwestern South Carolina. Greenville Water is governed by a commission which is composed of five members, three elected for staggered six-year terms and two ex-officio Commissioners, consisting of the Mayor and one City Council Member.METHODOLOGYThe principal methodology used in these ratings 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 DISCLOSURESFor 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_1243406.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. Sophie Fishbein 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 David Levett Additional Contact Regional PFG Chicago 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 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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