Monroe, LA Water Revenue Bond Rating Lowered Two Notches To 'BBB+'; Outlook Negative

DENVER (S&P Global Ratings) Oct. 28, 2024--S&P Global Ratings lowered its long-term rating by two notches to 'BBB+' from 'A' on Monroe, La.'s series 2018 water revenue bonds. The outlook is negative. "The downgrade and negative outlook reflect our view of the city's governance risk, including its risk management, culture, and oversight, as evidenced by reactive rate-setting practices and uncertainty surrounding future rate-setting," said S&P Global Ratings credit analyst Samantha Watkins. "It also reflects the limited local economy and a decrease in coverage," she added. The downgrade further reflects Monroe's incorrect consumer price index (CPI) calculations leading to insufficient rate increases in the past two years. Coverage fell from 1.9x in 2021 to approximately 1.0x in fiscal 2023, although the

...October 28, 2024 DENVER (S&P Global Ratings) Oct. 28, 2024--S&P Global Ratings lowered its long-term rating by two notches to '###+' from 'A' on Monroe, La.'s series 2018 water revenue bonds. The outlook is negative. "The downgrade and negative outlook reflect our view of the city's governance risk, including its risk management, culture, and oversight, as evidenced by reactive rate-setting practices and uncertainty surrounding future rate-setting," said S&P Global Ratings credit analyst Samantha Watkins. "It also reflects the limited local economy and a decrease in coverage," she added. The downgrade further reflects Monroe's incorrect consumer price index (CPI) calculations leading to insufficient rate increases in the past two years. Coverage fell from 1.9x in 2021 to approximately 1.0x in fiscal 2023, although the city implemented a 3.4% rate increase in May 2024 to begin returning coverage to historical levels. Net revenues of the water system secure the bonds. We view the bond provisions...

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