Fitch Ratings assigns an 'AA' rating to Grand Prairie,
Texas' $4.8 million water and wastewater system revenue bonds, new
series 2006. The bonds are scheduled to sell on a competitive basis on
March 21. First Southwest Company serves as the financial advisor to
the city. Fitch affirms the 'AA' rating on the city's $45.8 million of
outstanding parity bonds and $8.6 million of outstanding senior lien
bonds. The Rating Outlook is Stable.
The 'AA' rating reflects the City of Grand Prairie's sound policies, which have provided solid financial performance and healthy liquidity levels. Capital costs are manageable, and coverage levels are expected to remain strong. Rates will increase moderately over the near term but should remain competitive. The service area has neared complete recovery from the most recent national recession, benefiting from its central location in the Dallas-Fort Worth region.
The water system serves approximately 55,500 customers, and approximately 91% of all treated water is supplied by the Dallas Water Utilities (DWU) under a contract extending through 2012. Roughly 3% of the city's water supply is provided through a contract with Fort Worth that expires in 2010, and the balance is derived from city wells. The wastewater system serves approximately 55,000 customers, with treatment provided by the Trinity River Authority (TRA) under a contract that extends to 2023.
Coverage levels remain well above average, reflecting the city's lack of direct debt related to treatment facilities and source water supply. For fiscal 2005, unaudited annual debt service (ADS) coverage was a strong 2.4 times (x), consistent with historical results. ADS coverage is projected at around 1.9x-2.0x through fiscal 2010, although the city employs conservative modeling assumptions and actual performance has tended to be more favorable. Liquidity remains strong and in line with the 'AA' category. Fiscal 2005 liquidity was sizeable at around 540 days of unrestricted cash and investments.
The city's fiscal years 2006-2009 capital improvement program (CIP) totals almost $43 million, up about 60% from a few years ago as a result of elevated projected density populations in the southern sector of the city. Funding for the CIP is expected to come predominantly from this and future debt issuances, although the city plans to continue its practice of providing a substantial amount of pay-as-you-go funding. Utility rates are lower than the regional average and should remain competitive. Debt amortization is above average, with 53% of principal maturing in 10 years.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
The 'AA' rating reflects the City of Grand Prairie's sound policies, which have provided solid financial performance and healthy liquidity levels. Capital costs are manageable, and coverage levels are expected to remain strong. Rates will increase moderately over the near term but should remain competitive. The service area has neared complete recovery from the most recent national recession, benefiting from its central location in the Dallas-Fort Worth region.
The water system serves approximately 55,500 customers, and approximately 91% of all treated water is supplied by the Dallas Water Utilities (DWU) under a contract extending through 2012. Roughly 3% of the city's water supply is provided through a contract with Fort Worth that expires in 2010, and the balance is derived from city wells. The wastewater system serves approximately 55,000 customers, with treatment provided by the Trinity River Authority (TRA) under a contract that extends to 2023.
Coverage levels remain well above average, reflecting the city's lack of direct debt related to treatment facilities and source water supply. For fiscal 2005, unaudited annual debt service (ADS) coverage was a strong 2.4 times (x), consistent with historical results. ADS coverage is projected at around 1.9x-2.0x through fiscal 2010, although the city employs conservative modeling assumptions and actual performance has tended to be more favorable. Liquidity remains strong and in line with the 'AA' category. Fiscal 2005 liquidity was sizeable at around 540 days of unrestricted cash and investments.
The city's fiscal years 2006-2009 capital improvement program (CIP) totals almost $43 million, up about 60% from a few years ago as a result of elevated projected density populations in the southern sector of the city. Funding for the CIP is expected to come predominantly from this and future debt issuances, although the city plans to continue its practice of providing a substantial amount of pay-as-you-go funding. Utility rates are lower than the regional average and should remain competitive. Debt amortization is above average, with 53% of principal maturing in 10 years.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.