David Schmiedicke,
Finance Director
New York, November 25, 2019 -- Moody's Investors Service assigns a Aa2 rating to the City of Madison, WI's $33.9 million Water Utility Revenue Refunding Bonds, Series 2019A and $13.1 million Taxable Water Utility Revenue Refunding Bonds, Series 2019B. Concurrently, we assign a MIG 1 to the city's $20 million Water Utility Revenue Bond Anticipation Notes, Series 2019 and affirm the Aa2 rating on the city's outstanding water utility revenue debt. The outlook has been revised to stable from negative.
RATINGS RATIONALE
The Aa2 rating reflects the system's stable customer base that includes the Wisconsin (Aa1 stable) state capital and the University of Wisconsin's flagship campus, improved liquidity and debt service coverage following a drawdown in liquidity and the failure to generate net revenues needed to meet the 1.25x debt service coverage required by its rate covenant in fiscal 2017. Also incorporated are its high debt burden and limited rate setting ability.
The MIG 1 rating on the bond anticipation notes (BAN) incorporates underlying credit characteristics reflected in the water enterprise's Aa2 revenue bond rating and satisfactory management of take-out refinancing risks.
RATING OUTLOOK
The stable outlook reflects our expectation that the utility's debt service coverage and liquidity position will remain satisfactory following a rate increase approval.
