Portland gets A+ credit rating
Maria Thi Mai
If you had money to invest, would you loan it to the City of Portland for building sewers?
Someone would, since investors now hold about $1 billion in sewer system revenue bonds. Now the City has asked investors for another $270 million for sewer construction, mainly for ongoing combined sewer overflow control projects.
Many investors in revenue bonds rely on credit rating agencies to guide their decisions. Two of the best-known names in this business are Moody’s Investors Services (Moody’s) and Standard & Poor’s (S&P). Before each bond sale, we have a conversation with the rating agency analysts about our financial forecast, how we operate and maintain the sewer system and our construction plans for the next five to ten years. We’ve been doing this every other year for the past fifteen years. By now they know us pretty well.
They know that we’re a highly regulated utility. They understand our obligation to spend $1.4 billion on CSO controls, and the effect this has had on sewer rates. They understand that there are large uncertainties in our future (Portland Harbor, for one example).
Despite this, they still believe that Portland represents a good credit risk. The rating of A1 (Moody’s) and A+ (S&P) assigned to the new sewer revenue bonds are relatively high for a sewer revenue credit, particularly for a city with a capital construction plan as large as Portland’s. Two very important reasons for this (in S&P’s words) are “strong system management” and “strong resident support to date for rate increases and a sizeable capital program.”
Not that anyone enjoys paying these sewer rates, but Portlanders’ willingness to pay for a cleaner river and Council’s willingness to authorize the rates necessary to make it happen does matter.
Guest blog by: Jim Hagerman, Bureau of Environmental Services, Business Services Manager.
Posted by Maria Thi Mai on May 19, 2006
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Filed Under Environmental Services, Good Government, Livability & Environment
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