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AC Investment Research

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CENTENNIAL (S&P Global Ratings) Feb. 6, 2019--S&P Global Ratings assigned its 'AA+' long-term rating to Las Vegas Valley Water District, Nev.'s series 2019A limited-tax general obligation (GO) water refunding bonds (estimated par amount: $113.8 million). In addition, S&P Global Ratings affirmed its 'AA+' long-term rating on the district's outstanding limited-tax GO water revenue bonds, as well as its 'AA+' issuer credit rating on the district. Moreover, S&P Global Ratings affirmed its 'AA+' rating on the district's outstanding parity obligations additionally secured by the net revenues of the district, and parity debt additionally secured by pledged revenues of Southern Nevada Water Authority. Finally, S&P Global Ratings affirmed its 'A-1+' short-term rating on the district's limited-tax GO commercial paper notes. The outlook on all ratings is stable. "The 'AA+' ratings reflect our view of the district's role as a critical service provider in the greater southern Nevada region, along with a strong overall financial profile," said S&P Global Ratings credit analyst Michael Parker. Strong revenue growth and the district's willingness and ability to raise water rates continue to support debt service coverage. Although the district has never imposed a property tax to pay for debt service, the large size of the tax base and strong assessed value growth in recent years provide additional credit stability. Despite the district's sizable capital plans in the next 10 years, we believe strong management policies and practices will continue to support good coverage levels and a robust liquidity position. The stable outlook reflects our view of the strength of the local and regional economy within the Las Vegas-Henderson-Paradise metropolitan statistical area, supported by our expectation that the property tax will continue to grow. The stable outlook also reflects the district's stable population and customer base and strong liquidity and reserves. Furthermore, the outlook reflects our expectation that the district will maintain its strong financial position and at least good all-in coverage, despite significant capital needs in the near term. We do not expect to change the ratings over the next two years. Although not expected, we could raise the ratings if the district's all-in coverage levels significantly improve in a manner that we believe would be sustainable. Should district revenue collections deteriorate or near-term debt issuances weaken coverage to levels no longer in line with those of similarly rated peers, we could lower the ratings. The series 2019A bond proceeds are being used to refund the district's 2009A and 2009D GO water bonds outstanding. Upon issuance of the series 2019A bonds, the district will have approximately $2.74 billion in direct debt outstanding.

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