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Moody's assigns Aaa to Ohio Water Dev. Auth. Water Pollution Control Loan Fund Refunding Rev. & Rev. Bonds, Series 2019B; outlook stable

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October 2, 2019


Moody's Investors Service has assigned an Aaa rating to the proposed $300 million of Ohio Water Development Authority (OWDA), Water Pollution Control Loan Fund (WPCLF) Refunding Revenue and Revenue Bonds, Series 2019B (Bonds). Moody's also maintains a Aaa rating on outstanding WPCLF Revenue Bonds, outstanding Water Quality Bonds, and outstanding Drinking Water Assistance Fund (DWAF) Revenue Bonds. The outlook is stable.


The Aaa rating on the Bonds reflects the strong security provided by the size, diversity and credit quality of the combined program loan pools (loan pool), the pledge of substantial funds and reserves that results in a very high default tolerance, OWDA's established track record of successful management of this and other programs, and the cross-collateralization between the WPCLF and the DWAF. Similar to other State Revolving Funds (SRFs), the rating also considers the relatively weaker legal covenants of the program. However, we expect OWDA to manage the program to levels well above the minimum required by the bond documents and consistent with the assigned rating.


The stable outlook is based on our expectation that OWDA will maintain the program's strong metrics, including the loan pool credit characteristics, the default tolerance and debt service coverage ratios. Current default tolerance surpasses the required threshold for the rating level.


Not applicable.


Increase in program leverage that results in significant decline in debt service coverage ratios and default tolerance, or a material deterioration of the credit quality of the loan pool.


The security for the Bonds includes the pledged loan repayments after payment of debt service on existing Water Quality Bonds and WPCLF Bonds, excess interest not needed to pay state match bonds debt service, debt service reserve funds, and interest earnings. There are no state match bonds outstanding; however, to the extent that OWDA issues new ones, they will be paid on a senior basis from interest portion of the pledged loans' repayments originated under the Resolution.


The Bonds proceeds will be used to refund the Series 2017B WPCLF Notes, finance loans to municipalities within the state for eligible projects under the SRF program or reimburse OWDA for funds advanced for that purpose, and pay the costs of issuance.


OWDA was created in 1968 and has provided close to $12 billion of financing for water and wastewater projects throughout the Ohio's 88 counties. Since its creation in 1989, the Authority has been awarded over $2 billion in capitalization grants that required over $400 million in state match.


The principal methodology used in this rating was U.S. State Revolving Fund Debt published in March 2013. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.


For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Omar Ouzidane
Lead Analyst
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Florence Zeman
Additional Contact
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
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JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

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