Summary: Huntsville, Alabama; Water/Sewer

S&P Global Ratings assigned its 'AAA' rating to Huntsville, Ala.'s series 2021-A water revenue warrants and series 2021-B taxable water revenue warrants, and affirmed its 'AAA' rating on the system's existing warrants. The outlook is stable. The city's senior-lien net water system revenue pledge secures the bonds, which are on parity with its series 2019, 2016, and 2015 warrants. The city's subordinate-lien net revenue pledge secures the series 2013 and 2021 state revolving fund (SRF) loans. Officials intend to use series 2021-A warrant proceeds to refund the series 2019 warrants, and use series 2021-B warrant proceeds to refund a portion of the series 2015 warrants for interest cost savings. Due to the system's limited exposure to federal revenue, we believe

...Huntsville's water system serves a primarily residential and steadily growing customer base which provides a predictable revenue stream and has limited the need for rate increases in recent years. The utility benefits from its dependable water supply from the Tennessee River which is treated at its three water treatment plants that provide more than sufficient treatment capacity for at least the next 20 years. Due to the utility's sizable service territory covering 1,500 miles of water mains, management has prioritized capital investment in water main improvements to improve its above-average water loss levels. Its financial performance remains stable, as evidenced by robust all-in coverage above 2.0x in fiscal 2020 that we expect to be sustainable as the system cash-funds the majority of its capital improvement program (CIP). The rating also reflects our view of the utility's: + Participation in the broad and diverse Huntsville metropolitan statistical area (MSA), which contributes to...

Summary