Clarksville, TN – CDE Lightband’s bond rating remains strong and stable, a leading ratings agency says.
S&P Global Ratings, an arm of Standard & Poor’s Financial Services LLC, has affirmed its “AA-“ long-term rating on CDE’s outstanding electric system revenue bonds.
The rating reflects the agency’s view of the general creditworthiness of the city’s electric system.
It includes these strengths:
- The system’s role as a distributor of TVA power and energy, which greatly reduces financial and operational risk to CDE Lightband.
- The system’s strong debt service coverage and improved liquidity position equal to roughly 90 days cash on hand.
- Clarksville’s overall stable economic fundamentals, which feature a strong and growing local economy and key community anchors such as Fort Campbell and APSU.
A summary of findings by S&P credit analysts adds that Clarksville’s fundamentals include good income levels in the city, with median household effective buying income at 97 percent of the national average in 2015. The city continues to show progress in all areas of residential, commercial and industrial development, the summary says.
Analysts also said that system liquidity remains good as evidenced by maintaining available cash roughly equal to 90 days cash since fiscal 2013. Unrestricted cash and investments totaled $33.2 million in fiscal 2015 or a good 88 days cash on hand.
Officials do not have plans to draw down cash significantly, the statement says, and the system has an internal target to maintain cash equal to at least 10 percent of budgeted expenditures, which it currently exceeds.
S&P Global analysts said bond provisions were adequate with a rate covenant equal to 1.2 times annual debt service and an additional bonds test equal to 1.2 times average annual debt service.
“We consider the system’s debt burden low, and the stable outlook reflects our expectation that the major employers that anchor the service territory, plus management’s willingness to adjust rates to maintain a strong financial risk profile, support a AA- category rating,” S&P analysts said in the statement. “We do not expect to raise or lower the rating during our two year outlook horizon.”
