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Mason PUD News

Standard and Poor’s Upgrades Mason PUD 3 Bond Rating by Two Classification Levels

Standard & Poor’s (S&P) this week announced a two-level upgrade from A- to A+ in the bond rating of Mason County PUD No. 3. The upgraded credit rating, along with a previous improvement in bond ratings from Moody’s Investor Service, is expected to save PUD 3 nearly $1 million in finance costs over the 30-year term of a bond sale this summer. In April, Moody’s announced an upgrade in PUD 3’s rating from A2 to AA3.

The PUD was notified of the most recent upgrade by A. Dashen & Associates, the PUD’s financial advisory firm, which has worked with the local utility to improve its bond rating.

“We’re excited by another affirmation of the excellent financial health of Mason County PUD No. 3, and the management of its finances,” said Annette Creekpaum, PUD 3 finance manager. “These high bond ratings will allow the PUD to finance projects more easily, attract a broader range of investors to our bond sales, and make the bonds less costly to finance,” she said.

The A+ Standard and Poor’s bond rating shows that PUD 3 bonds are strong investments. The upgrade summary from S&P stated, “The improved ratings reflect the district’s consistently strong financial performance and maintenance of very low debt.” Coupled with the Moody’s Investment rating, these are generally considered high-grade bonds.

PUD 3 is considering the sale of bonds in July for several capital projects, including the Johns Prairie operations center; Mason substation rebuild; refinancing of previous bond sales at lower interest rates; potential relocation of PUD facilities related to the 1.5 mile Belfair SR 3 improvement project; and related finance charges. The sale is expected to be less than $70 million for a 30-year term.

Because of the timing of the issue and the maturing of current bonds issued by the PUD, it isn’t expected that the bond sale for the operations center will change debt service in the long term, and therefore will not have an impact on utility rates. The debt service may also be lower than anticipated due to the ability of the PUD to access “Build America Bonds” through federal stimulus programs. The federal assistance will provide annual rebates to reduce finance charges.

Standard & Poor’s is well known as a leader in credit ratings, indices, investment research and risk evaluations and solutions.

Mason County PUD No. 3 is a locally controlled public utility that provides electricity to nearly 33,000 customers in most of Mason County and small portions of Kitsap and Grays Harbor Counties. PUD 3 also provides wholesale telecommunications services through a fiber optic network. PUD 3 has won five straight Government Finance Officers Association awards of excellence for its annual reports and has experienced over 30 years of excellent audits from the Washington State Auditor’s Office.