Fitch Rates Clarksville, Tennessee Water, Sewer, Gas Rev & Rfdg Bnds 'A+'.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 rates Clarksville, TN's $58,980,000 Water, sewer and gas revenue refunding and improvement bonds, series 2007 'A+'. The bonds are schedule to sell competitively on April 17. Approximately $32.7 million in bond proceeds will refund in their entirety series 1997 bonds and a portion of the series 2001 bonds. Remaining series 2007 bond proceeds will fund the redemption of outstanding bond anticipation notes Bond anticipation note (BAN) A short-term debt instrument issued by a state or municipality to borrow against the proceeds of an upcoming bond issue. and provide funding for new capital needs, including a new water treatment plant. At this time, Fitch affirms the 'A+' rating on the system's approximately $178 million outstanding parity bonds. The Rating Outlook is Stable. The 'A+' rating reflects strong debt service coverage provided by system operations, conservative budgeting, solid liquidity, and adequate legal provisions. Clarksville (general obligation [GO] bonds rated 'AA-' by Fitch) is located 45 miles northwest of Nashville and experienced rapid growth over the 1990s. Such growth is likely to continue over the medium term, with expansions at Fort Campbell Fort Campbell is a United States Army installation located between Hopkinsville, Kentucky and Clarksville, Tennessee and is home to the 101st Airborne Division. The fort is named in honor of BG William Bowen Campbell, the last Whig Governor of Tennessee. , home of the 101st Airborne Division and the system's largest gas customer. Although the system maintains ample capacity at existing water and sewer treatment plants, growth-related needs as well as compliance with a state-issued enforcement order are expected to increase the debt load over the next five years. While debt service coverage is projected to remain solid, existing cash levels may be pressured. The system's current level of unaccounted for An inclusive term (not a casualty status) applicable to personnel whose person or remains are not recovered or otherwise accounted for following hostile action. Commonly used when referring to personnel who are killed in action and whose bodies are not recovered. water is above average. Legal provisions are solid. The bonds are secured by a special obligation pledge of the city, backed solely by net revenues of the system. Outstanding debt of the system is $188.5 million, including subordinate lien state sewer loans backed by a GO pledge of the city. The rate covenant Rate covenant A provision governing a municipal revenue project financed by a revenue bond issue, which establishes the rates to be charged users of the new facility. rate covenant requires 1.10 times (x) coverage of all debt obligations, and the additional bonds test Additional bonds test A test for ensuring that bond issuers can meet the debt service requirements of issuing any new additional bonds. additional bonds test , though not finalized, is expected to require 1.20x coverage of maximum annual debt service (MADS) for parity bonds, including adopted rate increases, and sum sufficient coverage on all debt obligations. System capital needs are extensive. Financial performance is strong, and liquidity is ample. In fiscal 2006, debt service coverage was 2.0x for all debt and coverage of pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma MADS was sufficient at 1.3x. Days cash on hand over the last five years has been satisfactory, averaging just over 100 days. While current rates are competitive for all services provided, significant rate hikes are planned over the next five years. Somewhat mitigating overall pressure on operations is the stability of the gas distribution system, constituting 63% of total revenues, driven by the ability to directly pass through price increases to customers. Close to 70% of the gas supply is procured through contracts, the largest of which was done through a pre-paid gas transaction in 2006 whereby the system procured 45% of its supply for a term of 15 years. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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