City’s public utility receives bond upgrade by Moody’s

The City of Richmond’s public utility, which provides water, sewer and gas to city residents and those throughout the metro region, has received a bond rating upgrade by Moody’s Investors Service to Aa1 – one step below the highest rating of AAA.

The upgrade, the second the city has received in the last two months, will allow the utility, known as the Richmond VA Combined Utility Enterprise, to borrow money at more favorable rates, producing cost savings estimated to be in the millions in upcoming years.

The City of Richmond’s general obligation bond rating was similarly upgraded to Aa1 by Moody’s in February.

“This upgrade is further proof that the mayor and his executive team are managing the city in a prudent and fiscally responsible way,” said David P. Rose, Senior Vice President at Davenport & Company, the city’s financial advisors.

Moody’s said the utility’s upgrade “reflects the strength and stability of the system's liquidity position and debt service, coverage ratios, supported by regular rate increases and long-range financial planning. The rating also reflects the system's large, diverse and growing service area, adequate treatment and storage capacity, elevated but manageable debt burden, as well as adequate legal provisions.” 

“A financially healthy, well managed public utility is central to providing the clean drinking water and reliable service our people depend on every day,” said Mayor Stoney. “This upgrade is more than just a feather in our fiscal cap. It creates greater opportunity for the city to save millions and reinvest in our vital infrastructure to meet the needs of our residents and customers.”   

The Moody’s release on the upgrade was issued in spite of the coronavirus outbreak and said the utility has a “stable” outlook. 

“Richmond VA Combined Utility is not susceptible to immediate material credit risks related to coronavirus,” the Moody’s report states. “Any potential declines in usage trends are unlikely to be material over the near-term given the essentiality of the services provided and the stability of the utility's customer base.  Additionally, the utility's healthy liquidity position will help to minimize the credit impact from any temporary disruptions to the collection of customer payments.”