Standard & Poor’s Raises Seattle Public Utilities Bonds Rating to AA+
Sound Management, Strong Financial Policies Cited re: Drainage and Wastewater Bonds

For immediate release: 3/25/08

For more information, Contact:
Seattle Public Utilities Customer Service, (206) 684-3000

SEATTLE—Standard & Poor's Ratings Service (S&P) has again raised its rating of Seattle's outstanding drainage and wastewater revenue bonds from AA to AA+, and at the same time has assigned its AA+ rating to the City's $99 million series 2008 drainage and wastewater revenue and refunding bonds.

The bond upgrades continue Seattle Public Utility’s (SPU) recent track record of bond rating upgrades, including S&P’s upgrade of the City’s drainage and wastewater bonds from AA- to AA in September 2006 and S&P’s upgrade of the City’s solid waste bonds from A+ to AA- in December 2007.

Only a handful of metropolitan drainage and wastewater utilities in the nation have secured the coveted S&P AA+ rating for their revenue bonds.

Mayor Greg Nickels said the latest rating from S&P is evidence that changes in financial management implemented over the last five years at Seattle Public Utilities (SPU) continue to bear fruit.

“This is a strong validation of our financial management plan for the city’s utilities,” Nickels said.

“In raising their ratings of our drainage and wastewater revenue bonds — for the second time in a row — Standard & Poor’s cited ‘very strong management practices and policies’ at SPU. This higher bond rating will allow us to secure better terms in the bond market and lower interest rates for Utilities’ rate payers,” the mayor said.

The bonds are secured by net revenues of the drainage and wastewater system.

According to the rating report, S&P’s latest actions “reflect the consistently very strong management practices and policies relating to the city's drainage and wastewater system by … SPU. Credit strength is enhanced by various progressive aspects of SPU's management of the system — both financial and operationally — over time.”

The improved AA+ rating, according to S&P, reflects the following credit strengths:

• The Seattle area's very deep and diverse economic base (Seattle and King County's general obligation bonds are both rated 'AAA'), despite presently softening economic conditions.

• Continued strong and improved debt service coverage (DSC) ratios that exceed and are supported by strong financial policies.

• Continued excellent management of SPU and its capital plan, with implementation of necessary rate increases that contribute directly to anticipated infrastructure needs and overall strong financial performance.

“The stable outlook reflects the continued strength of management's practices, including the recent enhancement of already progressive financial and operational policies, which we believe position the utility to maintain an excellent credit position in the future,” the report said.

Separately, Moody's Investor Service, the other bond rating agency, affirmed its previous strong Aa2 rating for SPU’s outstanding drainage and wastewater bonds.

In addition to providing a reliable water supply to more than 1.3 million customers in the Seattle metropolitan area, SPU provides essential sewer, drainage, solid waste and engineering services that safeguard public health, maintain the city’s infrastructure and protect, conserve and enhance the region's environmental resources.

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Seattle Public Utilities