Moody's Assigns Aa2 Rating to St. Petersburg, FL's Public Utility Refunding Revenue Bonds

Strategic Insights -

St. Petersburg, Florida, a city with a population of over 95,000 water, sewer, and reclaimed water accounts, has secured a Aa2 rating from Moody's Investors Service for its approximately $64.8 million Public Utility Refunding Revenue Bonds, Series 2025A and 2025B. The rating reflects the city's solid financial position, including a favorable liquidity and stable overall debt service coverage. Despite some vulnerabilities, such as elevated debt ratio and location on a peninsula prone to sea level rise and hurricanes, management's commitment to annual rate increases and the system's essential service provision have contributed to the stable outlook.

Key Takeaways:

  • Moody's Investors Service assigned a Aa2 rating to the City of St. Petersburg, FL's approximately $64.8 million Public Utility Refunding Revenue Bonds, Series 2025A and 2025B.
  • The Aa2 rating reflects the city's adequate treatment capacity, regional treated water supply, solid liquidity, and stable overall debt service coverage supported by annual rate increases.
  • The city's location on a peninsula, vulnerable to sea level rise and hurricanes, is considered a negative factor. However, management's commitment to annual rate increases and the system's essential service provision have contributed to a stable outlook.
  • The system provides services to the City of St. Petersburg, FL, and contracts with surrounding jurisdictions, with an estimated 95,126 water, 83,750 sewer, and 11,120 reclaimed water accounts as of 2025.
  • The principal methodology used in these ratings was US Municipal Utility Revenue Debt, published in March 2024.
  • The rating has a stable outlook, reflecting the system's healthy financial position and management's commitment to annual rate increases that can meet escalating debt service payments.
  • Factors that could lead to an upgrade of the ratings include improved wealth levels and reduced debt burden. Factors that could lead to a downgrade include coverage declines to below 1.5 times and debt increasing to 4x operating revenues.

Statistics:

  • The city's outstanding utility debt is approximately $800 million post-sale.
  • The system serves an estimated 95,126 water, 83,750 sewer, and 11,120 reclaimed water accounts as of 2025.
  • Moody's Investors Service affirmed the Aa2 rating on the city's outstanding parity debt.

Sources:

  • Moody's Ratings - [Moody's Ratings](Moody's website)
  • US Municipal Utility Revenue Debt methodology, published in March 2024, available at https://ratings.moodys.com/rmc-documents/416489.