Fitch Reaffirms OMWD’s Strong Bond Rating
On August 27, Fitch Ratings reaffirmed Olivenhain Municipal Water District’s strong bond rating of “AA+” with a stable outlook, citing OMWD’s excellent financial performance, strong debt service coverage, disciplined rate-setting, and manageable borrowing plans.
Fitch praised OMWD’s liquidity, which has been high historically. Additionally, Fitch noted that OMWD’s financial performance remained strong based on audited financials and despite state-mandated conservation efforts in response to the drought, demonstrating OMWD’s ability to withstand the effects of a decrease in water sales.
To prevent reliance on increasingly expensive imported water, OMWD has invested significantly in diversifying its water supply portfolio by expanding its recycled water system and studying the development of a brackish groundwater desalination facility. Diversification efforts were once again praised by Fitch as these will provide more reliable water supplies for OMWD customers at more predictable prices. Though OMWD may issue bonds to finance important new water facilities, maintaining its exemplary bond rating will afford it lower interest rates when doing so. Favorable interest rates can help to alleviate the upward pressure on water rates resulting from increasing wholesale water costs.
Fitch did note that OMWD’s water rates were affordable in the mature residential area with San Diego County’s diverse economy.
“It’s rewarding to note that Fitch has continued to recognize our efforts here at OMWD,” expressed Ed Sprague, OMWD’s Board President. “The AA+ rating will yield lower interest rates for OMWD, which provides us flexibility in funding critical capital improvement projects. This also results in low debt service costs to the benefit of our ratepayers.”
Bond ratings are key indicators of the financial health and long-term sustainability of an agency. Standard & Poor’s, another major rating agency, also reaffirmed in July OMWD’s AA+ rating with a stable outlook.