Standard & Poor’s affirms LCA’s AA bond rating
Updated On: Sep 04 2013 05:10:03 PM CDT
Lehigh County Authority's financial stability has been confirmed by Standard and Poor’s (S&P).
Last month, LCA issued $308 million in bonds to finance the water and sewer system lease agreement with Allentown.
As a result of that major undertaking, rating agencies took a closer look at LCA’s financing for its existing system, which provides water and sewer services to approximately 55,000 people in suburban communities outside the city limits.
On August 29, S&P issued a report of its findings, which includes a reaffirmation of LCA’s previous AA bond rating for its non-city system operations.
Citing the authority’s “stable outlook,” the report highlights several LCA features that support S&P’s AA rating, including its history of affordable water rates, strong financial position and debt-service coverage, adequate revenue diversification and ample water supply to meet projected customer demands for the next 10 years.
The AA rating is the third highest that S&P issues and keeps LCA among the highest rated bond issuers in the Lehigh Valley.
While the rating reflects only on the financial stability of LCA’s water system operations outside Allentown, an LCA spokesman called the ratings report "an important achievement for the authority in light of the lease deal with the city."
Throughout the past year, LCA's board and staff sought to reassure customers and other stakeholder groups that its decision to enter into the lease agreement with Allentown would not adversely affect existing customers, nor would non-city revenues be pledged to cover bond costs for the Allentown lease deal.
The reissuance of the AA bond rating by S&P serves as affirmation that this level of protection has been achieved, according to the LCA spokesman.
The full LCA report by S&P is available online.
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