KBRA assigns a AA long-term rating with a Stable Outlook to the Anaheim Housing and Public Improvements Authority's ("AHPIA") Revenue Bonds, Series 2025-A (Electric Utility Distribution System Improvements) and the Revenue Refunding Bonds, Series 2025-B (Electric Utility Distribution System Refunding), collectively the "Bonds". The Bonds are being issued by AHPIA on behalf of the City of Anaheim's (the "City") electric distribution system (the "Electric System") to pay for a portion of capital expenditures (via the Series 2025-A bond proceeds); and economically refund outstanding parity debt obligations (Series 2025-B bond proceeds).
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Electric System's consistently solid financial performance, with strong liquidity and debt service coverage, underpinned by favorable rate mechanisms to recover purchased power supply and environmental mitigation costs.
- Competitive, affordable retail rates relative to the State average, providing rate and financial flexibility.
- While portions of the service territory are exposed to wildfire risk, the Electric System anticipates 100% of the overhead lines in the highest wildfire risk areas to be undergrounded over the next year.
Credit Challenges
- Moderately high leverage, as measured by long-term debt to net utility assets (64.3% for FYE 2024).
- Tax base concentration in the leisure/hospitality industries, subjecting the City to greater economic volatility.
- Maintenance of competitive and affordable rates while managing an evolving power supply portfolio that complies with the State’s longer-term renewable targets.
Rating Sensitivities
For Upgrade
- Consistent financial performance above historical levels and/or improving leverage.
- Solidifying renewable additions through 2030, while maintaining rate competitiveness and affordability.
For Downgrade
- Pressured customer rates, financial performance and/or leverage resulting from the evolving power supply position in response to State mandates.
- Sustained decline in tourism that limits the Electric System’s financial flexibility.
To access ratings and relevant documents, click here.
Methodologies
- Public Finance: U.S. Municipal Retail Utility Revenue Bond Rating Methodology
- ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
Doc ID: 1010892
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Contacts
Analytical Contacts
Lina Santoro, Director (Lead Analyst)
+1 646-731-1419
lina.santoro@kbra.com
Joanne Ferrigan, Senior Director
+1 646-731-1455
joanne.ferrigan@kbra.com
Douglas Kilcommons, Managing Director
+1 646-731-3341
douglas.kilcommons@kbra.com
Douglas Kilcommons, Managing Director (Rating Committee Chair)
+1 646-731-3341
douglas.kilcommons@kbra.com
Business Development Contacts
James Kissane, Senior Director
+1 646-731-2380
james.kissane@kbra.com
William Baneky, Managing Director
+1 646-731-2409
william.baneky@kbra.com