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Rating Action:

Moody's assigns Aa2 to City of St. Petersburg, FL's Public Utility Revenue Bonds; outlook is stable

Global Credit Research - 20 Oct 2015

New York, October 20, 2015 --

Moody's Rating

Issue: Public Utility Revenue Bonds, Series 2015; Rating: Aa2; Sale Amount: $29,100,000; Expected Sale Date: 11/4/2015; Rating Description: Revenue: Government Enterprise

OPINION

Moody's Investors Service has assigned a Aa2 rating to the City of St. Petersburg's (FL) $29.1 million Public Utility Revenue Bonds, Series 2015. The bonds are secured by net revenues of the combined water, wastewater, reclaimed water and stormwater systems. The outlook is stable.

Moody's maintains a Aa2 rating on the system's outstanding senior-lien parity debt totaling $342.2 million.

SUMMARY RATING RATIONALE

The Aa2 rating is based on the utility's favorable financial condition with solid liquidity, moderate debt ratio and good debt service coverage, supported by a policy of annual rate increases. The rating also incorporates the essential service provision to a mature area, adequate treatment capacity, and regional water supply provided through membership in the Tampa Bay Water (TBW, Aa1 stable).

OUTLOOK

The stable outlook reflects the expectation that the system will maintain a sound financial position, demonstrated by adequate debt service coverage and ample liquidity, given a history of annual rate increases.

WHAT COULD MAKE THE RATING GO UP

• Favorable operating trend increasing debt service coverage and liquidity

• Material decreases in the debt ratio

WHAT COULD MAKE THE RATING GO DOWN

• Reduced debt service coverage levels below current projections and deterioration of cash

• Significant increases in debt ratios

• Lack of willingness to adjust rates in a timely and sufficient manner to support operating and capital requirements

OBLIGOR PROFILE

The system is more fully described in the body of the report.

LEGAL SECURITY

Legal provisions include a modified open-loop flow of funds, with a maximum of 15% of gross revenues transferred to the city's General Fund as payments in lieu of taxes, a 115% rate covenant, and a 115% additional bonds test (based on MADS). The debt service reserve requirement is the lesser of the three-pronged test. The reserve fund is funded with cash for all series, except for a surety policy with Assured Guaranty Municipal Corp. (A2 stable)and MBIA.

USE OF PROCEEDS

The city will use Series 2015 proceeds to fund capital improvements for the system.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was US Municipal Utility Revenue Debt published in December 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Gregory W. Lipitz
VP - Senior Credit Officer
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Christopher Coviello
Vice President - Senior Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns Aa2 to City of St. Petersburg, FL's Public Utility Revenue Bonds; outlook is stable
No Related Data.
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