Seattle's 2019 Municipal Light And Power Revenue Bonds Assigned 'AA' Rating

CENTENNIAL (S&P Global Ratings) Sept. 13, 2019--S&P Global Ratings assigned its 'AA' rating to Seattle's 2019 series A municipal light and power improvement revenue bonds and series B refunding revenue bonds. The utility does business as Seattle City Light (SCL). The outlook is stable.
Seattle pledges the light system's gross revenues to the bonds. The city anticipates using proceeds from the 2019 A bonds to finance capital improvements and conservation programs for the system, fund a reserve fund, and pay the costs of issuance. The city anticipates using series 2019 B proceeds to refund all or a portion of the city's series 2010B bonds.
The rating reflects the application of our "U.S. Municipal Retail Electric And Gas Utilities" criteria (published Sept. 27, 2018).
The very strong enterprise risk profile reflects our view of the utility's:
  • Very strong operational and management assessment;
  • Extremely strong service area economy;
  • Adequate market position; and
  • Extremely strong industry risk assessment relative to other industries and sectors.
The very strong financial risk profile reflects our view of the department's:
  • Very strong fixed-charge coverage (FCC);
  • Very strong liquidity; and
  • Adequate debt and liabilities score.
"The stable outlook reflects S&P Global Ratings' expectation that SCL will maintain its current liquidity and FCC levels through rate-stabilization policies, and continued conservative wholesale revenue forecasting," said S&P Global Ratings credit analyst Doug Snider.
Given SCL's financial forecast that indicates financial metrics in line with historical levels, increasing rates, and its large capital improvement plan and additional anticipated debt, we do not expect to raise the rating in the next two years.
We could lower the rating if the city's additional leverage or rising power supply costs from the Bonneville Power Authority result in materially higher retail rates or a weakened competitive position that frustrates its ability to maintain liquidity and achieve FCC commensurate with recent years' levels.
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