CAWCD Revenue Bonds again affirmed as “stable”

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Central Arizona Project Canal

Fitch ratings has once again affirmed the CAWCD Revenue Bonds with a stable “AA” rating and Issuer Default Rating (IDR) on CAWCD’s $40 million water delivery operation and maintenance revenue bonds, series 2016.

In addition, Fitch judged the outlook of the bonds to be stable.

What it means

According to the FitchRatings news release, the ‘AA’ bond rating and IDR reflect Fitch’s expectation that CAWCD’s leverage, measured as net adjusted debt to adjusted funds available for debt service, will remain very favorable the next several years, allowing the system to absorb potential operating pressures at the current rating level. Potential operating pressures include managing future cuts to water delivery, absorbing variability in power costs, and pursuing additional opportunities to firm and augment Central Arizona Project (CAP) water supplies.

CAWCD fiscal adjustments to shortage

In addition, according to the release, “The district (CAWCD) continues to adjust rates to offset reduced water deliveries. Following a Tier 2a shortage declaration for the 2023 water year (ended Sept. 30) as required by the 2019 Drought Contingency Plan (DCP), the district (CAWCD) will be billing long-term contact holders at Tier 1 rates during fiscal 2023 (that fiscal year ending Dec. 31, 2023). A reconciled rate that reflects the Tier 2a shortage, which is about a $10 per acre-foot increase, will be billed in fiscal 2024 for the difference.”

More information

To learn more about CAWCD Revenue Bonds, see section 7-9 of the 2022-23 Biennial Budget. CAWCD has maintained this secure rating since the issuance of the bonds in 2016.