...Standard & Poor's Ratings Services has revised its outlook on Cleveland's revenue bonds issued for Cleveland Public Power (CPP) to stable from negative. At the same time, Standard & Poor's affirmed its 'A-' rating on CPP's revenue bonds. The outlook revision reflects fixed charge coverage (FCC) of 1.1x in 2014, and management's indication that 2015 financial results are on par with those reported in 2014, which further solidifies our belief that the utility will maintain sound coverage levels. Moreover, based on calculations we prepared using CPP's financial projections, which we consider to be plausible, it appears likely that the utility will sustain FCC at this level through 2018. By comparison, FCC had been about 1.05x in 2012-2013 and strengthened following CPP's financing 2014 transaction that re-amortized portions of its debt to achieve a better alignment among revenues, expenses and debt service. Our FCC calculation treats as debt service and not as an operating expense the capacity...
