Pasadena Water and Power Retains ‘AA’ Bond Rating

Pasadena Water and Power once again received a ‘AA’ rating for its more than $200 million in bonds this week, according to Fitch Ratings.

The San Francisco based ratings firm reaffirmed the status for the utility’s $206.9 million in electric revenue and refunding bonds, issued in 2010, 2012, 2013, 2016 and 2019, Fitch said in a written statement.The rating outlook was deemed “stable.”

“In addition, Fitch has assessed Pasadena, CA Water and Power’s Standalone Credit Profile (SCP) at ‘AA,’” according to the statement.

“PWP’s rating reflects the electric system’s very strong revenue defensibility, driven by its diverse service area, rate flexibility and robust financial profile,” the statement said. “Future debt capacity should remain ample due to an expected decline in both direct and indirect fixed obligations beginning in 2023.”

However, Fitch representatives acknowledged the uncertainty created by the ongoing COVID-19 pandemic.

“The outbreak of coronavirus has created an uncertain environment for the public power sector,” the Fitch statement said. “While PWP’s performance through most recently available data has not indicated credit impairment, material changes in revenue and costs could occur or worsen if economic activity suffers further and government restrictions are maintained or expanded.”

Fitch planned to monitor developments related to the virus and revise expectations accordingly, the company said.

The rating company noted that PWP “possesses a diverse employment base with above-average economic and demographic indicators.”

It rated PWP’s overall financial profile as “very strong,” with financial obligations expected to decline beginning in 2023.

Municipal utilities throughout the U.S. undergo regular reviews of their finances and creditworthiness.

PWP received a bond rating of “AA” from another major ratings firm,  Standard and Poor Global Rating, upgraded from a “AA-” rating in 2018. S&P also rated PWP’s financial outlook as “stable.”