S&P raises rating on Pasadena electric revenue bonds to “AA”

S&P Global Ratings recently raised its rating to 'AA' from 'AA-' on Pasadena, Calif.'s existing electric revenue bonds.

At the same time, S&P Global Ratings assigned its 'AA' long-term rating to the city's series 2019A electric refunding revenue bonds. The outlook on all ratings is stable.

Pasadena Water & Power (PWP) serves the City of Pasadena.

In a mid-July report, S&P said the upgrade “reflects our opinion of Pasadena's strong service area that contributes to a competitive market position and the future flexibility to meet environmental requirements without negatively influencing the city's market position.”

S&P said the city's rate structure with prudent cost recovery supports very strong fixed charge coverage and extremely strong liquidity.

“Lastly, management demonstrates considerable acumen both financially and with respect to power supply planning. It is evident in the city's integrated resource plan that management is thoughtfully balancing ratepayer costs with the need to be compliant, environmentally conscious, and diverse. In addition, management and city council are transparent with ratepayers and take seriously their role in guiding the strategic approach of the utility,” the rating agency said.

“Based on the city's reserve policies, it is also clear management has a very clear understanding of their risk and cost profile and sets aside funds to meet potential contingencies,” S&P added.

PWP’s credit profile has consistently received a rating of AA with a “stable” outlook from Fitch Credit Ratings.