Moody's Investors Service upgrades Henry County utility's bond rating

Moody's has assigned an A1 rating to the HCWSA's $51 million Series 2002A Water and Sewer Revenue Refunding and Improvement Bonds, as well as the $5.16 million Series 2002B Water and Sewer Revenue Refunding Bonds.

Feb 4th, 2003


McDonough, GA, Feb. 4, 2003 -- As the Henry County Water & Sewerage Authority (HCWSA) joined the Henry County Board of Commissioners in preparations to go to the bond market with a joint resolution at the end of last year, it looked to Moody's Investors Service to provide ratings for those bonds.

The results of those ratings are in, and they reflect the financial strength of the authority and the appeal of its bonds to investors.

Moody's has assigned an A1 rating to the HCWSA's $51 million Series 2002A Water and Sewer Revenue Refunding and Improvement Bonds, as well as the $5.16 million Series 2002B Water and Sewer Revenue Refunding Bonds.

In addition, on approximately $116 million of the Authority's additional long-term debt, Moody's has upgraded the bond rating from A2 to A1 as well.

According to the financial ratings agency, several factors weighing in favor of the Authority enabled it to obtain the more advantageous bond ratings. For one, the customer base is expected to continue to grow as a part of the rapidly expanding greater Atlanta region.

In addition, sound financial operations, proactive rate adjustments, and the availability of supplemental property tax revenue make the utility's bonds more appealing to investors.

"We're certainly pleased to have received the more favorable bond ratings, because of how they reflect on our operations and what they'll mean to our customers," says Lindy Farmer. "This is an objective and credible financial source telling us that we're doing a good job of overseeing the public's water utility and managing the continued growth in the county. "

In addition, the better bond ratings from Moody's for the bond refinancing by the Authority and Board of Commissioners will provide monetary benefits to Authority customers for years to come, in the form of money saved in interest payments on necessary long-term debt.

"Better bond ratings typically equate to better interest rates, which in return save us lots of dollars in interest payments over the life of the bonds," adds Farmer.

"By refinancing some of our current long-term debt, we'll save more than $1 million over the next decade and beyond. It's much the same thing as a family refinancing their house to take advantage of 45-year low interest rates."

In its review of the HCWSA operations and assets, the ratings agency noted that the
Authority's substantial expansion plans present a significant challenge to a highly leveraged system.

"However, we believe the system's strong capital planning, proactive rate increases, and
growing property tax revenues will enable officials to keep debt levels manageable despite growth pressures," conclude analysts from Moody's.

The HCWSA, as outlined in its charter, obtains a small percentage of its revenue from the 2- mil tax assessed to Henry County home and property owners. However, as noted by Moody's,
property tax revenue is projected to increase because of the anticipated growth in the tax base -and likewise increase in HCWSA customers.

In fact, HCWSA drinking water customers are growing at a rate of 11% per year, while sewer customers are increasing at a clip of 17% per year .That equates to roughly 4,000 new water customers and 1,500 new sewer customers coming on line in Henry County every 12 months.

The new money portion obtained from the Series 2002 bond issue will help finance the
HCWSA's construction of the Tussahaw water production plant and adjoining reservoir, as well as other drinking water system improvements.

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