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Southern Nevada Water Authority -- Moody's assigns Aa1 to Las Vegas Valley Water District, NV's Series 2021C GOLT refunding bonds

·14 min read

Rating Action: Moody's assigns Aa1 to Las Vegas Valley Water District, NV's Series 2021C GOLT refunding bondsGlobal Credit Research - 23 Feb 2021New York, February 23, 2021 -- Moody's Investors Service has assigned Aa1 ratings to the Las Vegas Valley Water District, Nevada's $197.3 million General Obligation (Limited Tax) (Additionally Secured by SNWA Pledged Revenues) Water Refunding Bonds, Series 2021C. Moody's maintains a Aa1 issuer rating on the district, as well as Aa1 ratings on the district's $2.7 billion in outstanding GOLT bonds not refunded by these issues. The rating outlook is stable.The issuer rating represents Moody's assessment of hypothetical GOULT debt, though GOULT bonds are not issued by local governments in Nevada. The GOLT pledge in Nevada is limited by constitutional and statutory limitations on overlapping levy rates for property taxes.RATINGS RATIONALEThe Aa1 issuer rating reflects the district's large tax base that is coterminous with nearly all of Clark County (Aa1). Although the coronavirus pandemic has severely affected the tourism and gaming industry that the regional economy depends upon, the effect on water demand and revenue has been more moderate given the essential nature of the service. Moody's regards the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. The rating incorporates the district's solid financial profile, including greater than sum-sufficient coverage from net revenue, high but manageable debt levels and very strong liquidity. The district has strong resource planning and an ample water supply despite long-standing drought conditions.The absence of a rating distinction between the district's issuer and GOLT ratings reflects the strength of the full faith and credit pledge in Nevada, which Moody's rates at the same level as the issuer ratings of local governments in the state.RATING OUTLOOKThe rating outlook for the district is stable given the strong cash positions held by the district and by the Southern Nevada Water Authority that provide substantial cushions for the economic distress brought about by the coronavirus pandemic. Importantly, despite near-term demand volatility, we also anticipate that management will continue to actively monitor drought conditions for its principal water supply, the federally managed Colorado River, and implement operating adjustments as needed over the medium term to ensure sufficient water remains available for use.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING- Significantly strengthened debt service coverage- Continued growth in the service area and diversification of the local economy- Sustained improvement in operating performance, relative to peersFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING- Unwillingness to adopt prudent rate increases to support operations and debt service- Failure to implement a property tax, if needed, to support debt service- Significant declines in available water supplies- Weakened debt service coverage levels by pledged resources- Material contraction in the district's tax base and economyLEGAL SECURITYThe 2021C bonds are secured by the district's full faith and credit pledge, subject to Nevada's constitutional and statutory limitations on overlapping levy rates for property taxes that are capped at a combined $3.64 per $100 of assessed value. The 2021C bonds are additionally secured by the net revenue of the Southern Nevada Water Authority.USE OF PROCEEDSThe 2021C bonds will be used to refinance the district's 2004A Commercial Paper Notes.PROFILEThe Las Vegas Valley Water District is the retail water provider to the City of Las Vegas and almost all the unincorporated portions of Clark County. The Southern Nevada Water Authority is the wholesale water provider to nearly all of Clark County, including the cities of Las Vegas, Henderson, North Las Vegas, and Boulder City.METHODOLOGYThe principal methodology used in this rating was US Local Government General Obligation Debt published in January 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1260094. 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.The rating has been disclosed to the rated entity or its designated agent (s) and issued with no amendment resulting from that disclosure.This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website 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.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.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. Steven Goodman-Leibof Lead Analyst Regional PFG West Moody's Investors Service, Inc. 405 Howard Street Suite 300 San Francisco 94105 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Gera McGuire Additional Contact Regional PFG Dallas 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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