KBRA Assigns AA Rating and Stable Outlook to the Anaheim Housing and Public Improvements Authority's Series 2025-A and 2025-B Revenue/Revenue Refunding Bonds Issued on Behalf of City of Anaheim's Electric Utility System
18 Aug 2025 | New York
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.
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