Summary
Moody’s and S&P Global assigned high credit ratings to the King County Wastewater Treatment Division’s upcoming bond issuance, helping the utility borrow money at lower interest rates and saving money for sewer ratepayers. Agencies cited strong financial management practices and a dedicated commitment to system investment, practices that have allowed King County to maintain high credit ratings for more than 15 years.
News
Moody’s and S&P Global recently released high credit ratings for the King County Wastewater Treatment Division’s upcoming bond issuance, citing long-term planning, “strong financial management,” and “transparent and well-defined financial management practices” in rationale statements.
Funded almost entirely by ratepayers, the King County Wastewater Treatment Division serves nearly 2 million people and provides wholesale wastewater treatment services to a combined 33 cities and local sewer utilities in King, Snohomish, and Pierce counties, along with the Muckleshoot Indian Tribe. High credit ratings help moderate financial impacts on ratepayers because King County can borrow money at lower interest rates, meaning the utility pays less in interest over time.
“We are working every day to make the most of every dollar that goes into our system,” said Kamuron Gurol, Director of the King County Wastewater Treatment Division. “Utility bills add to the affordability challenges in our region, and we are committed to ensuring strong financial management practices while we work to pursue a sustainable path forward for our ratepayers.”
The Wastewater Treatment Division has maintained high credit ratings for more than 15 years. The reliability of its system, strong financial management practices such as maintaining high debt service coverage ratios and cash reserves, and policymakers’ support in raising rates to cover needed system investment costs all contribute to the consistently high ratings.
This year, Moody’s Ratings assigned an Aa1 rating to the Wastewater Treatment Division’s upcoming bond issuance, maintaining the same rating on all outstanding long-term senior lien debt, and an Aa2 rating on all outstanding junior-lien debt. The ratings agency wrote that it expects the system will “continue to maintain solid debt service coverage and liquidity levels supported by strong financial management” and noted that the outlook “reflects the expectation of prudent rate increases to support operations and the enterprise’s large capital plans.”
Meanwhile, S&P Global Ratings assigned its AA+ long-term rating to the Wastewater Treatment’s upcoming bond issuance. S&P also reaffirmed the division’s AA+ rating for its previously issued senior lien bonds and AA rating on its junior lien bonds. S&P noted the rating reflects the “general creditworthiness” of the utility and “the utility’s capacity to perpetuate consistently healthy financial metrics.”
The Wastewater Treatment Division is working to ensure strong financial management while addressing increasing costs. The division is forecasting the need to invest around $14 billion in its system over the next decade, due to three key cost-drivers: Building facilities to meet regulatory requirements, upgrading aging infrastructure, and increasing capacity for a growing population. The largest driver, regulatory requirements, includes $7 billion for projects such as facilities to reduce overflows caused by outdated combined sewer systems.
While the high credit ratings allow the Wastewater Treatment Division to borrow money at lower interest rates and reduce additional pressure on ratepayers, forecasted sewer rates for the next decade remain higher due to the projected expenses. King County Executive Girmay Zahilay has directed the division to further enhance efforts to manage costs and seek solutions that improve affordability for ratepaying households.
The Wastewater Treatment Division is working with partners including the Metropolitan Water Pollution Abatement Advisory Committee and the King County Council’s Regional Water Quality Committee on long-term planning, discussions over rate predictability, and other efforts to pursue a more sustainable rate path.
The Wastewater Treatment Division is one of four divisions at the King County Department of Natural Resources and Parks.
Contact
Akiko Oda, Wastewater Treatment Division. 206-263-4190