...S&P Global Ratings assigned its '##' rating and stable outlook to Ann Arbor, Mich.'s series 2016 water supply system revenue refunding bonds and affirmed its '##' rating, with a stable outlook, on the city's existing water enterprise revenue debt. The rating reflects our opinion of the system's general creditworthiness, including a very strong enterprise risk profile and extremely strong financial risk profile. Officials intend to use series 2016 bond proceeds to refund the city's series 2008A water system revenue bonds. The system's net revenue secures the bonds. Bond provisions are adequate, in our view. The rate covenant requires debt service coverage (DSC) of net revenue at 1.25x or higher. The calculation of the 1.25x additional bonds test is in terms of average annual debt service. The system funds the debt service reserve fund, at the least of, the three-prong test. The water system had $42.3 million in debt as of fiscal year-end 2015. Factors that support the very strong enterprise...
