Evansville, IN’s Series 2019A Sewage Works Revenue Bonds Rated ‘A+’
CENTENNIAL (S&P Global Ratings) March 19, 2019–S&P Global Ratings assigned
its ‘A+’ long-term rating to Evansville, Ind.’s series 2019A sewage works revenue bonds, and affirmed its ‘A+’ long-term rating and underlying rating (SPUR) on the city’s existing sewage works revenue debt. The outlook is stable.
“The stable outlook reflects our opinion of the system’s recent strong financial performance and expectation that management will likely take appropriate measures, including additional rate increases, to maintain finances as the system continues to address its capital needs, especially with the consent decree,” said S&P Global Ratings credit analyst Malcolm D’Silva.
“The outlook further reflects our view of the city’s recognized role as a regional economic center despite its adequate incomes, providing rating stability within the two-year outlook period.”
The rating reflects, in our opinion, the combination of strong enterprise risk and very strong financial risk profiles. In 2016, the city finalized the integrated overflow control plan (IOCP) under a consent decree with the U.S.
Environmental Protection Agency (EPA) known as “Renew Evansville.” Combine sanitary and storm drains account for approximately 40% of the sewer system, resulting in overflows into streams and, ultimately, the Ohio River. Under the terms of the agreement, the IOCP requires significant upgrades to the sewer system with improvement projects totaling $729 million over 24.5 years. The city has already begun implementing the plan, and it has issued parity debt obligations in the past two years for planned projects under the decree.
Including the 2019A bonds, the total outstanding sewer system revenue bonds total approximately $432 million. Planned bond issuance through 2019, excluding this series 2019A bonds, include an additional $63 million in sewer revenue bonds through the state revolving fund (SRF) program. We understand the city is currently in discussion with the EPA regarding timing and sizes of future projects, after which it will evaluate additional funding sources, including additional rate increases and debt.
A net system revenue pledge secures the series 2019A bonds, which are on parity with bonds outstanding. Evansville is issuing its series 2019A bonds to finance various system improvements, upgrades, and expansions.
FOOTNOTE: Source- AC Investment Inc.| Jersey