Norfolk Receives Positive Water Revenue Bonds Outlook, AA+ Rating from Fitch
In the course of routine surveillance, Fitch Ratings boosted the outlook on Norfolk’s Water Revenue Bonds from stable to positive and reaffirmed its strong AA+ rating.
The decision to upgrade the City to a positive outlook indicates that Norfolk’s finances and ratings are on a positive trajectory to potentially receive a Fitch rating increase to AAA within the next 18 – 24 months.
The positive outlook reflects the Water System’s extremely strong current financial profile across key financial metrics such as debt service coverage and liquidity, declining leverage expected to remain under 5.0x over the five-year horizon, and commitment to strong financial policies and practices. Fitch also noted other strengths of the Water System including its capacity to meet the needs of its users, the extensive and diverse water supply, the expansive and healthy service area, and ample capital reinvestment on rehabilitation and maintenance.
Norfolk’s AA+ bond rating from Fitch reflects the Water System’s strong financial profile including its low net leverage and strong liquidity, the strength of its position as a wholesale provider, and its stable customer profile. The City’s water revenue bonds are secured by a pledge of net revenues of the City's water system.
This rating comes in addition to Norfolk’s strong credit rating of AA+ from Standard & Poor’s Global Ratings (S&P) and its rating of Aa2 from Moody’s Investors Service (Moody’s). Strong ratings continue to assist the Water System in achieving low cost of funds to finance key capital projects; but perhaps more importantly, the strong ratings represent the System’s financial strength.
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