NEW YORK, Sep 15, 2000 (BUSINESS WIRE) -- Fitch rates Charlotte, N.C.'s approximately $101,200,000 water and sewer system revenue bonds, series 2000, `AAA'. The bonds are scheduled to sell on Sept. 27 through a syndicate led by Banc of America Securities LLC, Wachovia Securities Inc. and First Union National Bank.
The `AAA' rating on the utilities' revenue bonds reflects the very strong and growing Mecklenburg County service area and the utilities' well managed and maintained facilities, ample water supply for current and projected needs, strong financial condition, and sizable reserves, and very moderate rates that should remain competitive after upcoming reasonable increases. The city of Charlotte's water and sewer utilities had total revenues of $126.6 million in fiscal 2000, on an unaudited basis. The rating also takes into account the system's high future debt needs. The rating was upgraded to `AAA' from `AA+' in June, 2000 in conjunction with Fitch's comprehensive municipal credit review following publication of its Sept. 1999 Municipal Default Study.
The utilities are embarking on a large, $815 million capital improvement program (CIP) over the next seven to eight years, or about $100 million annually. Since 95% of the program is to be funded with revenue bonds, the system's currently moderate leverage will increase. Planned projects will primarily fund growth-related needs. The plan is flexible and can be scaled down if growth projections change.
Debt service coverage is well in excess of legal requirements, which are somewhat weaker than is typical in this rating category but still satisfactory. Debt service on these and parity bonds, including bonds to be issued over the next five years, are well covered from projected net revenues. Coverage through fiscal 2005 is expected to be at least 2.53 times (x), assuming full implementation of the CIP. Including general obligation bonds and other subordinate debt, coverage is at least 1.09x.
The system serves all of Mecklenburg County, with an estimated 1998 population of 628,010. The city of Charlotte's estimated 2000 population is 527,291. Growth in the city and county has been strong, and prospects for continued economic expansion are good. Wealth levels are high, and unemployment is well below the state's low level in 1999 of 3.2%.
Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.
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