Fitch Ratings recently assigned a “AA-“ rating to bonds issued by the city of Eugene, Ore., on behalf of the Eugene Water and Electric Board.
The bonds are $64 million electric system revenue and refunding bonds series 2024.
Fitch has also affirmed the ratings on the following parity bonds at 'AA-':
- $183.7 million electric system revenue bonds and revenue and refunding bonds, series 2012, 2016A, 2017, 2020A, and 2020B.
Bond proceeds will fund capital needs of the system, including Carmen-Smith Hydroelectric project relicensing costs, pay costs of issuance and potentially refund series 2012 bonds for savings, depending on market conditions. Bonds are expected to price the week of June 3, 2024 via negotiated sale, Fitch said.
Fitch has assessed the standalone credit profile (SCP) at “aa-“. The SCP represents the credit profile of the system on a stand-alone basis irrespective of its relationship with the credit quality of the city of Eugene.
The Rating Outlook is Stable.
The “AA-“ ratings “reflect EWEB's very strong financial profile maintained over the last five years with continued stable operating performance through pandemic-related economic stresses, volatile hydroelectric availability and increased market energy pricing,” Fitch said.
“The ratings are supported by EWEB's strong revenue defensibility assessment, which includes a component of competitive revenue from off-system sales, as well at the utility's full independent ability to adjust rates as necessary in a strong service territory.”
The majority of EWEB's energy resources are contracted, largely from Bonneville Power Administration, with a smaller portion of owned generation and market purchases that together produce a very low operating cost burden and overall very strong operating risk profile, the rating agency said.
EWEB's leverage ratio, measured as net adjusted debt-to-adjusted funds available for debt service, has increased over the past five years as the utility has shifted to an increase in purchased power from owned generation and has increased spending on relicensing and refurbishment of the Carmen-Smith Hydroelectric Project.
Despite the current debt issuance associated with the Carmen-Smith Hydroelectric Project and other distribution system improvements, EWEB's financial profile “is expected to remain very strong and supportive of the rating through Fitch's five-year forward rating case. Fitch expects leverage ratio (below 7.0x) to remain adequate for the rating over the medium term, supported by stable financial margins and projected annual rate adjustments.”
