Fitch Ratings has assigned an “AA-“ rating to bonds issued by the Lower Colorado River Authority. The Rating Outlook is Stable.
Specifically, Fitch rated as “AA-“ approximately $29.4 million refunding revenue bonds, series 2023A and approximately $105.8 million refunding revenue bonds, series 2023B.
Bond proceeds will be used to refund outstanding bonds for savings and pay costs of issuance. The 2023A bonds are expected to be issued as fixed rate bonds, while the series 2023B bonds are expected to be issued with a mandatory five-year tender structure. The bonds are expected to price on June 5, 2023 via negotiated sale.
In addition, Fitch has affirmed the following LCRA ratings at 'AA-':
- Issuer Default Rating;
- $675.7 million revenue and refunding revenue bonds, series 2013, 2015A, 2015B, 2015D, 2020, 2022 (pre-refunding amount);
- Bank bond rating on CP series B.
The “AA-“ IDR and bond ratings reflect LCRA's maintenance of a very strong consolidated financial profile, in the context of its “aa” revenue defensibility and “a” operating risk assessments, the rating agency said.
Fitch noted that Winter Storm Uri resulted in additional costs in fiscal 2021 that caused a temporary tightening of financial ratios in FY21, although liquidity and coverage levels remained robust. “However, financial performance in FY22 and year-to-date FY23 have returned to historically strong levels.”
Inflationary cost pressures associated with fuel and purchased power costs have been passed through to wholesale customers through LCRA's monthly fuel-rate adjustment, providing a key protection to the generation business operating income levels, it said.
“Overall, LCRA's consolidated business is transitioning towards greater reliance on transmission revenues, but load growth in the wholesale customer service areas is occurring and prompted LCRA to begin construction this year on a new 190 MW natural gas plant.”