Full Description

In July 1991, only months after selling almost $300 million in long-term debt, the Philadelphia Water Department shocked the credit markets by announcing that it had missed its bond coverage ratio for the fiscal year ending June 30, 1991. By August 1993, though, the Department was issuing new debt and refinancing existing bonds in the largest municipal offering in Pennsylvania history, over $1.158 billion. The story of how Philadelphia came back from the brink of financial disaster in just two years to become a resurgent credit has lessons which may be applicable to other municipal issuers, particularly public water agencies with mid-level credit ratings. In rehabilitating itself, the Department: took critical steps internally to stabilize and enhance its financial situation and identify and implement plans for its long-term recovery; created a strategy for rebuilding the confidence of rating agencies, institutional investors and investment bankers who rate, purchase and market the Department's debt; and took advantage of its marginal financial position to create leverage for change which likely would not have been possible or initiated absent such a crisis. The authors hope that most utilities seeking to borrow money or establish the confidence of outsiders will not face these same challenges. However, the experience of the Philadelphia Water Department in reestablishing its financial credibility does have replicable lessons for other utilities in building relationships with rating agencies, large investors, insurers and oversight bodies.

Product Details

Published: 01/01/1995 ISBN(s): 0898678315 Number of Pages: 8File Size: 1 file , 380 KB