Published : Monday, July 29, 2019 | 4:39 AM
Pasadena Water and Power Department has received an upgraded AA rating from Standard and Poor (S&P) Global Rating, from the utility’s previous AA-, PWP General Manager Gurcharan Bawa said last week.
The S&P rating is a credit score that describes the general creditworthiness of a company, city, or country that issues debt. S&P’s ratings indicate how likely a debt will be repaid. With an AA rating, PWP is considered “investment grade,” with a very strong capacity to pay.
“The upgrade to AA reflects our opinion of Pasadena’s strong service area that contributes to a competitive market position and the future flexibility to meet environmental requirements without negatively influencing the city’s market position,” the S&P report stated. “The city’s rate structure with prudent cost recovery supports very strong fixed charge coverage and extremely strong liquidity. Lastly, management demonstrates considerable acumen both financially and with respect to power supply planning.”
Bawa said PWP’s credit profile has also consistently received an AA rating with a “stable” outlook from Fitch Credit Ratings.
Similar to S&P, Fitch ratings are an opinion on the relative ability of an entity to meet financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. An AA rating by Fitch indicates “very high credit quality” and a very strong capacity for payment of financial commitments which is not significantly vulnerable to foreseeable events.
Municipal utility agencies throughout the United States, such as PWP, are assessed regularly on creditworthiness, outstanding long-term and short-term debt, and newly issued revenue bonds.
While some municipal utilities have experienced a downgrade in their credit rating status, PWP’s credit profile has been consistently stable under both S&P’s and Fitch’s assessments, Bawa said.