OREANDA-NEWS. S&P Global Ratings raised its ratings on bonds issued by East Cherry Creek Valley Water & Sanitation District (ECCV), Colo. to 'AA-' from 'A+'. The outlook is stable.

"The upgrade reflects the application of new criteria," said S&P Global Ratings credit analyst Scott Garrigan. The rating reflects, in our opinion, the combination of very strong enterprise risk and financial risk profiles, among other factors.

"The ratings also reflect our expectation that ECCV will both issue additional debt in the next several years and somewhat spend down its large cash balance to finance capital projects," he added.

The bonds are special limited obligations of the enterprise, on behalf of the district, secured by a first-lien pledge on net revenues of the district's water system. Other provisions include a pledge to set rates so that net revenues generate no less than 110% annual debt service, and a limitation on issuing additional bonds only if net revenues are at least 125% pro forma maximum annual debt service (MADS).

ECCV spans approximately 8,725 acres in unincorporated Arapahoe County, adjacent to Aurora and southeast of Denver. It serves approximately 55,000, with a population of 67,200 expected at build-out.

"The stable outlook reflects our expectation that the district would take the appropriate steps to guard against any measures that would severely stress its financial position, especially as it addresses capital needs," added Mr. Garrigan.

If the water enterprise's financial position becomes materially stronger, based on our calculations of debt service coverage and liquidity, and is sustained for multiple fiscal years, we could raise the rating. However, upward rating movement would most likely be outside of the two-year outlook horizon.