S&P Global Ratings and Moody’s recently affirmed SacSewer’s strong credit ratings and stable financial outlook. SacSewer’s credit ratings of AA+, from S&P Global Ratings, and Aa2, from Moody’s, are investment grade ratings awarded to organizations with excellent financial health. These ratings provide assurance to bond holders (investors) that SacSewer continues to be in a strong financial position and has the ability to fully repay its debt.
As part of the upcoming issuance of $440 million in 2024 series bonds, SacSewer is required by U.S. securities laws to obtain updated credit ratings, which provide an independent assessment of SacSewer’s financial strength and its ability to borrow money in public credit markets. The issuance of the 2024 bonds will allow SacSewer to refinance higher interest rate debt and reduce its annual debt service costs by approximately $4 million. This is $4 million that will now be available for SacSewer to use on its treatment and resource recovery operations that would otherwise have continued to go toward repayment of debt.
To develop credit ratings and overall financial health, the rating agencies review recent financial history and operating information, financial plans, and forecasts of future financial performance. They also review our ability to operate the sewage system and honor all operating and financial obligations—including repayment of debt. SacSewer’s recent merger and ongoing efforts to become an employer of its own staff were also part of the rating evaluation. This credit ratings information is used by investors who will buy SacSewer’s bonds.
S&P Global Ratings and Moody’s are two of the largest credit rating agencies in the world and belong to what is called the “Big Three” credit rating agencies. The third agency is Fitch. S&P Global Ratings and Moody’s are the two largest of the three, collectively controlling about 80% of the global institutional credit rating market.
