KISSIMMEE, Fla., July 14, 2008 – Moody’s Investors Service has upgraded to A1 from A2 the rating on Kissimmee Utility Authority’s $101.6 million in senior lien bonds due to the prior lien nature of the bonds, solid debt service coverage, somewhat more favorable legal provision that include a cash funded debt service reserve and the closed lien for additional senior lien bonds.
At the same time, Moody affirmed the A2 underlying rating on Kissimmee Utility Authority’s (KUA) $69.7 million Electric System Refunding Revenue Bonds, Subordinate Series 2003 in conjunction with the remarketing of the bonds from auction rate securities (M-STARS) to insured floaters with insurance provided by FSA and a SBPA with Dexia Credit Local. An outstanding swap with JP Morgan Chase Bank will remain in place. The A2 underlying rating affects $109.7 million subordinate lien revenue bonds, including this remarketing.
The subordinate lien bonds are secured by a subordinate lien on the electric system’s net revenues. The strength of the Authority’s ratings are also based on the utility’s generally favorable operating performance, regionally-competitive cost structure, favorable working capital position and the above-average debt ratio with rapidly-maturing bonds (all debt retired by 2018) and limited borrowing requirements.
According to the rating update, KUA has operated well financially, maintaining favorable senior lien debt service coverage at 1.88 times in fiscal 2004 to 3.23 times in fiscal 2007 (1.59 times and 1.63 times respectively including debt service on subordinate debt and commercial paper notes).
“We are extremely proud of this achievement,” said Jim Welsh, KUA president and general manager. “This new, higher rating is Moody’s top single-A rating and will help lower the utility’s borrowing costs in the future. The achieved savings will be passed on to utility customers in the form of lower bills.”
The complete rating statement is available online at http://www.moodys.com.
Founded in 1901, KUA (www.kua.com) is Florida’s sixth largest community-owned utility providing electric and telecommunication services to 170,000 residents in five Central Florida counties.
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Chris M. Gent