Sonoma Water Receives Highest Credit Rating Possible for Water Bonds

Published on Jun 20, 2019 at 01:17p.m.

FOR IMMEDIATE RELEASE - June 20, 2019

CONTACT: Barry Dugan, Principal Programs Specialist, 707-547-1930, 707-331-2040, barry.dugan@scwa.ca.gov

Improved rating reflects agency’s extremely strong financial performance

(Santa Rosa, CA)  – The Sonoma County Water Agency’s (Sonoma Water) credit rating has been raised to AAA – the highest rating possible.  AAA credit ratings are very seldom provided to entities as small as Sonoma Water and this rating signifies the confidence Sonoma Water has earned in the financial community.  The increased credit rating from AA+ to AAA reflects the agency’s “extremely strong recent financial performance – even when challenged by the recent drought,” according to Standard & Poor’s (S&P), the company that issued the higher rating and provides credit ratings for the debt of public and private companies.  This fiscal standing allows the Sonoma Water to receive lower interest rates when it issues water revenue bonds, which was confirmed last week when Sonoma Water received its lowest interest ever for its 2019 bond issue.

In approving the higher rating, S&P cited the importance of Sonoma Water’s water supply to its wholesale customers; the use of timely rate increases to partly offset the effects of declining water sales; and comprehensive operational management practices and policies. In approving the higher credit rating, S&P also considered the strong credit profiles of Sonoma Water’s three largest customers: the city of Santa Rosa, city of Petaluma, and the Marin Municipal Water District, which together comprise about two-thirds of the agency’s water system revenue.

“We are very pleased to receive this vote of confidence in the financial stability and sound fiscal practices of Sonoma Water,” said Sonoma Water Chair David Rabbitt. “Providing a safe and reliable supply of drinking water to more than 600,000 people is our highest priority. This credit rating supports our policy of investing in critical infrastructure so we can provide a reliable water supply for many years to come.”

“This higher credit rating is a result of improving management practices over the past 20 years,” said Sonoma Water Assistant General Manager Mike Thompson. “The key though is our Board of Directors’ consistent approval of moderate annual rate increases and their belief in infrastructure investments.”

Thompson also noted the collaborative environment that exists between Sonoma Water and its municipal customers, who have supported the long-term program of moderate rate increase to support water transmission improvements. The $11 million bond issue will be used on projects to further protect Sonoma Water’s water transmission system against earthquakes, and other disasters.

A higher credit rating also makes refinancing existing debt more feasible by attracting lower interest rates from investors, “which would result in savings to ratepayers,” said Thompson.

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Sonoma Water provides water supply, flood protection and sanitation services for portions of Sonoma and Marin counties. Visit us on the Web at www.sonomawater.org.

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