Moody’s upgrades regional water authority’s debt rating
Credit rating company Moody’s Investor Services has raised the rating on debt of Metro Detroit’s regional water authority.
Moody’s has upgraded the Great Lakes Water Authority’s water and sewer senior lien debt from Baa3 to Baa1, officials said Friday. The credit rating firm also gave the authority a “stable” outlook.
It also upgraded the credit rating on the GLWA’s water and sewer second lien debt from Ba1 to Baa2 with the same “stable” outlook.
Obligations rated “Baa” are judged to be subject to moderate credit risk, according to Moody’s. Those rated “Ba” are judged to be subject to substantial credit risk.
The news comes about a month after the authority, which provides water and sewage service to millions of customers in the region, took over Detroit’s system. It also marks the GLWA’s second ratings upgrade from Moody’s in the last six months and the third in the past 18 months.
“Not only did the investors affirm the stand-up of GLWA as a positive step with our bond transaction in December, but this early upgrade from Moody’s is also an affirmation of all the hard work that has gone into making GLWA a reality,” Sue McCormick, the authority’s CEO, said in a statement.
Officials with the regional water authority said Moody’s upgraded its credit because of the GLWA’s assumption of all debt previously secured by the Detroit Water and Sewerage Department’s net revenue. They also said another reason was the GLWA’s sole ownership interest in revenue generated by the combined regional and local system, which significantly limits the risk of a future Detroit bankruptcy filing.
Last summer, officials with the state, Detroit and Oakland and Wayne counties agreed to turn over the city of Detroit’s water and sewer system to the GLWA for the next 40 years under a deal stemming from Detroit’s bankruptcy.
As part of the deal, the authority is leasing the water and sewage system from Detroit for $50 million a year plus about $50 million a year toward pension costs and a fund to help struggling customers pay their bills.
In addition, the GLWA was made the water service provider for 3 million customers in suburban Detroit. Meanwhile, Detroit residents continue to get service from the city’s water department.
A six-member board made up of one representative each from the state, Macomb, Oakland and Wayne counties and two from Detroit oversees the authority.