King County receives upgraded sewer bond ratings from Moody's and Stardard & Poor's

Will save the county $40 million over life of bonds

July 28, 2008

Citing progress made on the Brightwater project and reduction in risk now that the project is largely under contract, Moody’s and Standard & Poor’s announced upgrades to King County sewer revenue bond ratings last week.

The higher ratings will benefit the sale of $350 million in sewer revenue bonds on Monday, July 28 which will be used to finance capital construction projects for the county’s regional wastewater system, which includes the new Brightwater Treatment Plant.

“These ratings are a reflection of the financial strengths of the wastewater system and the county in general, and will translate into relatively low rates on bond financings for this sale, as well as on future bond sales ”, said King County Executive Ron Sims.

The upgrades are expected to result in a reduction in the interest rates that the county will pay on the sewer revenue bonds to be issued over the next five years to finance the wastewater capital program, including the completion of the Brightwater Treatment Plant and its conveyance system. The lower rates are expected to reduce the annual debt service on the new bonds, as well as for bonds sold over the next four years, by approximately $1 million, resulting in estimated savings of $40 million over the life of the bonds.

The Moody’s rating for these sewer revenue bonds, as well as similar bonds issued in the past, went from A1 to Aa3 while S&P raised their rating from AA to AA+. Both rating agencies also upgraded their underlying rating for the utility’s variable rate bonds by one notch to A2 (Moody’s) and AA- (S&P).

The rating above is separate from the county’s voter-approved general obligation debt, which received the highest AAA ratings from all three national credit rating agencies in previous reviews.