Wanaque Valley Regional Sewerage Authority, NJ Series 2009 A And B Bond Ratings Raised To 'AA'; Watch Removed

NEW YORK (S&P Global Ratings) May 24, 2019--S&P Global Ratings raised its rating on the Wanaque Valley Regional Sewerage Authority, N.J.'s (WVRSA) series 2009A and B sewer revenue bonds to 'AA' from 'A+' and removed them from CreditWatch with positive implications, where they were placed on Feb. 28, 2019. At the same time, S&P Global Ratings affirmed its 'AA' long-term rating on the borough of Wanaque's general obligation (GO) debt outstanding. The outlook for all ratings is stable.
The raised rating reflects our assessment that the bonds benefit from Wanaque's ad valorem taxing power, correcting an analytical error. Previously, the WVRSA bonds were rated based only on a net revenue pledge for the authority, rather than the combined pledge of the authority and the borough.
The borough's full-faith-and-credit pledge secures the borough's outstanding bonds. WVRSA's bonds are secured by both a lien on the revenues of WVRSA and Wanaque borough's ad valorem taxing power, which provides additional security for the bonds.
The rating reflects our assessment of the following factors for the borough, specifically its:
  • Very strong economy;
  • Adequate management;
  • Strong budgetary performance;
  • Very strong budgetary flexibility;
  • Very strong liquidity;
  • Very weak debt and contingent liability profile; and
  • Strong institutional framework score.
Wanaque is in northeast Passaic County, about 35 miles from New York City.
The stable outlook reflects our opinion of Wanaque's stable operating performance and sizable reserves. The very strong local economy and access to broad and diverse MSAs provides further stability. Therefore, we do not expect to raise or lower the rating within our two-year outlook horizon.
If economic indicators were to improve while the borough adopts additional financial management policies and practices and maintains its current reserves, we could raise the rating.
If pressures from long-term liabilities pressure budgetary performance, resulting in reserve reductions to levels no longer commensurate with those of peers, we could lower the rating.
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