Fitch: JEA Wtr & Swr's 2004C Sr and 2004B Subs 'AA'; Upgrades Subs to 'AA'.NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings
An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns an 'AA' rating to JEA JEA Journalism Education Association
JEA Jacksonville Electric Authority
JEA Journal of Egyptian Archaeology
JEA Jamaica Exporters Association
JEA Jackson Energy Authority (Jackson, Tennessee) Water and Sewer System's (JEA W&S) $87 million water and sewer system Noun 1. sewer system - facility consisting of a system of sewers for carrying off liquid and solid sewage
sewage system, sewage works
facility, installation - a building or place that provides a particular service or is used for a particular industry; "the refunding revenue bonds, 2004 series C, and $20 million of water and sewer system subordinated revenue bonds, 2004 series B. Fitch also affirmed af·firm
v. af·firmed, af·firm·ing, af·firms
1. To declare positively or firmly; maintain to be true.
2. To support or uphold the validity of; confirm.
v.intr. the 'AA' rating on the outstanding senior lien senior lien n. the first security interest (lien or claim) placed upon property at a time before other liens, which are called "junior" liens. (See: mortgage, deed of trust, lien, UCC-1) bonds and upgraded the rating on the outstanding subordinated lien bonds to 'AA' from 'AA-'. All ratings are removed from Rating Watch Evolving, which they were placed on June 8, 2004 as part of Fitch's review of its notching policies. The Rating Outlook on all JEA W&S bonds is Stable. Proceeds from the 2004 series C senior bonds from the 2004 series B subordinated bonds Subordinated bonds
Securities that fall after others in priority of claims on the entity in the case of financial distress. will pay a portion of the costs of construction and acquisition of additions, extension, and improvements to JEA's combined water and sewer system. The bonds are expected to price the week of Sept. 6, 2004 with Citigroup as senior manager.
The upgrade of the subordinate bonds is a result of Fitch's belief that JEA W&S credit factors are consistent for a water and sewer utility in the 'AA' category and that its lien profile does not warrant any difference in ratings between the two liens.
Fitch's conclusion to rate the senior and subordinate liens similarly are a result of:
--JEA W&S' financial strength and overall strong credit profile;
--Minimal dilution expectations for subordinate debt See Junior debt. ;
--Diminutive legal distinction/protection between senior and subordinated liens (despite limited cross default provisions).
Fitch had placed JEA W&S' rating, together with those of 11 other credits with separate liens, on Rating Watch Evolving in June 2004 as part of a review of Fitch's guidelines guidelines,
n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. regarding ratings applied to different liens of public power credits (notching). Fitch's review reflects changing conditions occurring across the industry and improving individual issuer risk factors. For additional information regarding Fitch's notching criteria, see the Fitch report, 'To Notch or Not to Notch,' dated June 8, 2004 available on the Fitch Ratings web site at 'www.fitchratings.com'.
JEA W&S' strong credit ratings take into account Fitch's constructive view of the water and wastewater sectors and management's successful efforts to improve operations, lower the cost structure, upgrade an aging infrastructure, and bring the utility into environmental compliance since the acquisition of the water and sewer system from the city in 1997. Fitch believes that JEA W&S has financially positioned itself well for the foreseeable future with no major system expansions needed for both the water and sewer systems over the next ten years. JEA's deliberate and aggressive business plan has positioned the W&S system well for the future with a system that is in good physical condition and has substantial water and treatment capacity reserve margins. With the help of programs such as Better Jacksonville and the new City of Jacksonville water and sewer expansion authority, JEA will continue to upgrade and expand its services, lower its unit costs, and solidify so·lid·i·fy
v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies
1. To make solid, compact, or hard.
2. To make strong or united.
v.intr. its financial position.
Additional support for the ratings are an excellent service area with a diverse and growing economic base, competitive rates, and historically sound performance with debt service coverage of 1.9 times (x) for the fiscal year ended Sept. 30, 2003 (2.05x for the 12 months ended March 31, 2004). Over the past few years, management stepped up the amount of planned capital expenditures as a result of the City of Jacksonville's push to accelerate some Better Jacksonville projects (a coordinating plan to repave the city streets and replace aging utility infrastructure). JEA's projected debt service coverage levels of 1.7x to 1.8x reflect stable operating expenses Operating expenses
The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , manageable additions to total debt, and no major repairs or replacements anticipated in the near-term and the implementation of a new conservation rate in the October 2004.
While JEA's five-year capital improvement plan appears to be large (approximately $721 million through 2008), a majority of the expenditures are for system upgrades with 55% financed from debt. After taking into account debt retirements through 2008, net debt will increase by a manageable $287 million. The CIP (1) (Common Isochronous Packet) The packet format used in time-based (real time) FireWire transmission. See FireWire, IEC 61883 and mLAN.
(2) (Common Industrial P includes system upgrades and replacements and additions that are expected to reduce future operating and maintenance costs, as well as increase water treatment capacity by about 14% over the next five years.
Additional credit strengths include a lack of customer concentration and a service area that exhibits strong annual sales growth of about 3.5% and favorable fa·vor·a·ble
1. Advantageous; helpful: favorable winds.
2. Encouraging; propitious: a favorable diagnosis.
3. wealth indicators. The system also enjoys ample water supply, and both the water and sewer systems have treatment capacity sufficient to meet system needs until about 2015. Furthermore, the combined monthly bill compares well to regional utilities and is below that of its immediate neighbors.
The JEA water and sewer business serves approximately 249,000 and 185,000 water and sewer accounts, respectively. Revenues are approximately 54% residential, 38% commercial and industrial, 5% irrigation irrigation, in agriculture, artificial watering of the land. Although used chiefly in regions with annual rainfall of less than 20 in. (51 cm), it is also used in wetter areas to grow certain crops, e.g., rice. , and 3% governmental. The service area includes virtually all of the City of Jacksonville, with the exception of the beach communities, the Town of Baldwin, the U.S. naval facilities, and those areas served by other community and investor-owned water and sewer utilities.