St. Johns County, Florida, water/sewer bonds upgraded to Aa1 by Moody's

St. Johns County, Florida's water and sewer bonds were upgraded to Aa1 from Aa2 by Moody's Ratings, which cited the system's exceptional cash position and strong debt service coverage.

The outlook is stable.

After an anticipated $49 million in water and sewer refunding and improvement revenue bonds, Series 2026, are sold, the county's water and sewer enterprise will have $275 million in debt outstanding.

Moody's noted the enterprise had 1,200 days cash on hand and that debt service coverage has historically been strong, at over three times. Debt service coverage has consistently beaten expectations, the agency said in its Sunday upgrade note.

Moody's said the enterprise had a sizable and growing customer base with above-average wealth levels. Management "plans to request from the county board annual rate increases of 5.75% over the next five years, which exceeds the annual consumer price index increase."

Moody's said debt service coverage would likely decline to about two times by around 2027. The county's debt-to-operating ratio exceeds Aa-medians at 3.6 times including the anticipated Series 2026 bonds. However, Moody's expects this "will remain manageable despite additional borrowing in 2027."

St. Johns County government didn't immediately respond to a request for a comment.

The bonds are not rated by S&P Global Ratings. It couldn't be immediately ascertained whether Fitch Ratings and/or KBRA rate the bonds.

The upgrade comes as other water and sewer utilities are struggling with various issues.