News Story

Summary

Louisville & Jefferson County Metro Sewer District, KY’s (MSD, Aa2 stable) credit profile
reflects the essential service provided to a large regional economic center and the district’s
sound financial metrics despite large capital needs. The system is large with $160 million in O&M expenses, significantly greater than the median for the rating category. Debt service
coverage has steadily increased in recent years to about 1.9x, which is supported by annual
rate increases. While the district’s five year plan projects coverage decreasing to around
1.5x, actual coverage has consistently outperformed projections because of conservative
assumptions. Debt represents an elevated 5.5x revenues but will steadily decrease due to
revenue growth from rate increases and debt amortization outpacing future issuances.

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