North Hudson Sewerage Authority, NJ Debt Rating Raised To 'A+' On Consistent, Stronger Financial Metrics

NEW YORK (S&P Global Ratings) Jan. 10, 2019--S&P Global Ratings raised its 
long-term rating on the North Hudson Sewerage Authority (NHSA), N.J.'s bonds 
to 'A+' from 'A'. The outlook is stable. 

"The upgrade reflects the maintenance of financial metrics that we consider 
more consistent with the current rating as opposed to a lower one, together 
with our expectation that these margins should be sustainable, even with the 
authority's additional debt plans," said S&P Global Ratings credit analyst 
Scott Garrigan. NHSA's current five-year capital improvement plan within its 
2019 budget indicates $35.3 million of capital projects, with $27.3 million of 
funding from state loans.

"The rating reflects, in our opinion, the combination of a very strong 
enterprise risk profile and a strong financial risk profile," said Mr. 
Garrigan. An additional limiting rating factor is that NHSA has ongoing debt 
needs, which, in our view, introduces some uncertainty regarding what future 
financial performance will look like compared to the historical trends.

As of the last completed fiscal year on Jan. 31, 2018, NHSA had $325 million 
of lease certificates and $57 million of state loans outstanding.

A gross senior-lien revenue pledge secures NHSA's series 2012A, 2012B, and 
2012C certificates.

NHSA serves four municipalities immediately across the Hudson River from New 
York City in Hudson County:
  • Union City (35% of fiscal 2018 billed wastewater flows),
  • Hoboken (29%),
  • West New York (29%), and
  • Weehawken (8%).
NHSA directly bills its customers on a quarterly basis, and the total customer 
count has remained stable for some time at around 23,000, but has grown over 
the previous three years to 23,866 in 2019.

"The stable outlook reflects our view that both the financial and economic 
factors supporting the rating over the next several years should remain at 
levels consistent with historical trends, even with the additional debt 
plans," added Mr. Garrigan.
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