Lompoc, CA#s Series 2017 Wastewater Refunding Revenue Bonds Assigned #A# Rating

Stocks and Financial Services Press Releases Thursday November 30, 2017 09:11
SAN FRANCISCO--30 Nov--S&P Global Ratings
SAN FRANCISCO (S&P Global Ratings) Nov. 29, 2017--S&P Global Ratings assigned its 'A' rating to Lompoc, Calif.'s series 2017 wastewater refunding revenue bonds. The outlook is stable.
The city is issuing the series 2017 bonds to refinance its series 1998, 2005, and 2007 obligations, which have a combined water and wastewater revenue pledge, for debt service savings.
"We view the wastewater system as having both strong enterprise and financial risk profiles," said S&P Global Ratings credit analyst Akua Pokua-Nuako.
The enterprise risk profile reflects our view of the wastewater system's:
  • Service area participation in the broad and diverse Santa Maria-Santa Barbara metropolitan statistical area economy;
  • Very low industry risk as a monopolistic service provider of an essential public utility;
  • Affordable rates given good area income levels of 92% of the national median; and
  • Very strong operational management practices and policies.
The financial risk profile reflects our view of the wastewater system's:
  • Recent improvement in all-in debt service coverage (DSC) metrics to strong levels from historical insufficient levels;
  • Consistently strong liquidity position of over a year's cash on hand, which we believe is sustainable in the near term;
  • High system leverage position of 69% with minimal planned capital spending and no additional debt plans in the near future; and
  • Very strong financial management practices and policies.
The stable outlook reflects our expectation that the system will maintain consistent or better financial metrics given its recent planned rate adjustments and manageable capital needs.

We could raise the rating during the two-year outlook period if management were to demonstrate sustained improvement in its financial position by maintaining all-in DSC at levels exceeding current metrics while enhancing cash levels.

We could lower the rating if all-in DSC is significantly worse than management's estimates, if results continue to indicate insufficient all-in DSC from recurring net revenue, or if liquidity declines materially.

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.

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