KBRA assigns a long-term rating of A- with a Stable Outlook to the City of Columbia, TN Long Term Water Supply Program Project Bonds (WIFIA ID 19133TN).
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Quickly growing service area population with favorable socioeconomic characteristics.
- Favorable operating history and very low existing leverage.
- Necessary rate adjustments through 2030 are already adopted.
Credit Negatives
- Borrowing for the Long Term Water Supply Project will increase leverage to an exceptionally high level.
- Need to substantially increase rates through 2030 to support escalating debt service requirements.
- Though part of the rapidly growing Nashville, TN metropolitan area, the service area employment base is somewhat reliant on a single General Motors manufacturing plant. Loss or diminishment of this employer would weigh significantly on the underlying resource base.
Rating Sensitivities
For Upgrade
- Successful implementation of adopted rate adjustments through 2030 accompanied by completion of the LTWSP on time and within budget and gradual moderation of the Water System’s debt burden thereafter.
For Downgrade
- Inability to manage the complexities and associated cost of the large multi-year capital improvement program.
- Failure to implement already approved rate increases each year through 2030 resulting in unplanned deterioration in liquidity and debt service coverage.
To access ratings and relevant documents, click here.
Methodology
Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
Doc ID: 1015517
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