...S&P Global Ratings assigned its '##+' rating and stable outlook to Cleveland's roughly $99.16 million series 2020GG water system revenue refunding bonds. Officials intend to use series 2020GG bond proceeds to advance refund portions of series 2012X and 2015Y bonds on a federally taxable basis for savings. We consider bond provisions credit neutral. Bond provisions on the senior-lien debt include a 1.25x rate covenant, an additional bonds test, and a closed flow of funds. For the second-lien debt, bond provisions are more permissive, in our view, with a rate covenant showing net revenue covering the greater of 1.25x senior-lien debt or 1x senior bond debt service and 1.1x adjusted subordinate annual debt service. The additional bonds test reflects historical debt service coverage (DSC) of 1x senior debt and 1.1x subordinate debt and projected DSC of 1x and 1.1x senior and subordinate debt. When the majority of bonds issued under a prior trust indenture are defeased, certain springing covenants...
