San Juan Bautista, CA Enterprise Revenue Bond Rating Outlook Revised To Stable From Positive

Stocks and Financial Services Press Releases Friday May 19, 2017 09:09
SAN FRANCISCO--19 May--S&P Global Ratings

SAN FRANCISCO (S&P Global Ratings) May 18, 2017--S&P Global Ratings revised its outlook to stable from positive and affirmed its 'A-' underlying rating (SPUR) on San Juan Bautista, Calif.'s enterprise revenue bonds, issued on behalf of the city's water system and wastewater system. The rating reflects, in our opinion, a strong enterprise risk profile and a strong financial risk profile for each system.

"We revised our outlook to stable based on the city's additional medium-term borrowing for the water system to replace the metering system and based on a new annual repayment plan for the systems to repay loans from the city's general fund," said S&P Global Ratings credit analyst Tim Tung.

The enterprise risk profile reflects our view of the systems': Service area located in San Benito County that has an agriculture-based local economy;Very low industry risk as a monopolistic service provider of an essential public utility;Moderately high combined water and sewer rates; andStandard operational management practices and policies.

The financial risk profile reflects our view of the systems': Good to strong all-in coverage metrics that we anticipate will be sustainable;High leverage levels based on debt-to-capitalization ratios of 85% and 71% for the water system and the wastewater system, respectively;Manageable capital plan with no additional borrowing needs; andGood financial management practices and policies.

The stable outlook reflects our view of the systems' sustained good to strong all-in coverage metrics and limited additional capital needs.
During the two-year outlook period, we anticipate that the city will continue to adjust service rates regularly to maintain wide margins.

We could take a positive rating action if financial metrics continue to be strong and are sustainable while the city addresses any system capital needs and the local economy continues to develop and diversify. We could take a negative rating action if the systems significantly underperform to forecasts, there is a significant drawdown on liquidity for any reason, or if there are additional regulatory risks identified by the state board or further environmental actions that require significant additional capital needs.

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 for further information.
Complete ratings information is available to subscribers of RatingsDirect at and
All ratings affected by this rating action can be found on the S&P Global Ratings' public website at Use the Ratings search box located in the left column.

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