S&P: Lincoln, AL Water And Sewer Revenue Debt Rating Raised To 'A' On Updated Criteria; Outlook Stable
The rating action primarily reflects S&P Global Ratings application of its updated criteria, titled "Rating Methodology And Assumptions For U. S. Municipal Waterworks And Sanitary Sewer Utility Revenue Bonds," published Jan. 19, 2016, on RatingsDirect, particularly with respect to its view of the system's sound financial profile.
At the same time, the rating service assigned its 'A' rating and stable outlook to the city's $1.08 million series 2016 water and sewer revenue warrants.
The rating reflects S&P Global Ratings' opinion of the system's very strong financial risk profile, somewhat offset by an adequate enterprise risk profile.
"We do not currently expect to change the rating within our two-year outlook period. While outside our two-year outlook period, we could raise the rating if the local economy were to continue to expand due to manufacturing sector growth, leading to a diverse revenue stream and improved economic fundamentals," said S&P Global Ratings credit analyst Jose Razo. "While not currently likely due to current margins and the city's plan to maintain cash, we could lower the rating if the city's overall financial profile were to deteriorate significantly."
A first-lien net-revenue-water-and-sewer-system pledge secures the series 2016 water and sewer revenue warrants. Officials intend to use series 2016 warrant proceeds to fund capital improvements.
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