Moody’s Investors Service Affirm EBMUD’s Top Rating by East Bay Municipal Utility District Feb 16, 2024 Member Submitted News Moody’s Investors Service affirmed its highest “Aaa” bond rating of East Bay Municipal Utility District (EBMUD) water system revenue bonds on January 29. The update maintains a Triple-A streak dating back to May 2022 when Moody’s first upgraded the water bonds, making EBMUD the only water utility in California to receive Moody’s top assessment. Moody’s January 29, 2024, report cited several factors in its rating affirmation, including: “The district’s water system has a healthy financial profile that has demonstrated resilience through previous periods of drought.” “The strong credit profile is supported by a history of sound financial operations supported by timely rate increases resulting in ample liquidity and healthy debt service coverage that consistently exceed budgeted projections.” “Credit strength reflects strong regulatory compliance, capital planning and ongoing initiatives to diversify water supplies, storage and recycling capabilities, and robust drought contingency planning to ensure that operations and finances remain stable even under severe drought conditions.” Moody’s also cites EBMUD’s experienced management team and its independently elected Board of Directors “singularly focused on the management and operation of the enterprise.” EBMUD is the only Moody’s Aaa-rated agency in California and one of only nine water utilities in the United States with this high rating. S&P Global Ratings also reaffirmed its “AAA” rating for EBMUD’s water system revenue bonds on January 29, noting, “The water system’s credit quality is underpinned by its robust historical financial performance, coupled with a comprehensive rate structure that promotes stability and cost recovery through hydrological and economic cycles.” While pointing to EBMUD’s strong financial position, S&P acknowledged the District must contend with drought cycles and exposure to threats posed by potential wildfires and earthquakes. But it cited EBMUD’s formal drought-management plan and strategic approach to address other risks. “Management has robust emergency planning to address seismic, wildfire, and cyber risks, in a timely manner,” the S&P report states. “The district is proactively addressing its aging infrastructure, water supply reliability, and climate resiliency as part of its strategic priorities.” The reports reflect the focused work by the EBMUD Board of Directors, management and staff to plan, borrow and invest responsibly to ensure EBMUD’s long-term financial stability and operational resiliency. The latest bond ratings give EBMUD the ability to put its best foot forward when issuing new bonds and obtain favorable borrowing rates. EBMUD sold $426 million in water system bonds on February 7. The bond issue was a success, with the full issue selling during a 90-minute order period after receiving tremendous interest from investors, said EBMUD Treasury Manager Robby Hannay. Amid that competition, EBMUD secured a blended 4.18 percent interest rate on funds out close to 30 years, a very low interest rate in the current market. EBMUD also planned to price $25 million in wastewater system revenue bonds on February 14. “I feel so fortunate to work on such an outstanding team of finance professionals, engineers, operations staff, administrators, and more, and that this team’s consistent hard work is seen and recognized,” said EBMUD Director of Finance Sophia Skoda. “This means the lowest possible borrowing rate for our ratepayers.”
