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Agency hikes water board's credit rating

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OKLAHOMA CITY (AP) _ A major credit rating agency raised the bond rating for the Oklahoma Water Resources Board, a move that will allow cities and towns across the state to borrow money from the board at reduced rates.

Standard & Poor's on Wednesday raised the rating on the Water Resources Board's $317 million of bonds outstanding from AA+ to AAA, the gold standard of bond ratings.

``That's higher than the state of Oklahoma's rating,'' said Chris Cochran, investment banker to the board.

Cochran, of Capital West Securities in Oklahoma City, said the new rating was offered because the board is about to issue about $50 million in bonds for the city of Tulsa, which will benefit from the higher rating and subsequent lower interest rates. Future borrowers and municipalities with adjustable-rate loans from the board also will gain from the higher rating, he said.

Only a handful of Oklahoma entities have earned AAA bond ratings, Cochran said.

Since 1985, the Water Resources Board has issued more than $725 million of bonds through its state loan program, and has never had a default on its local loans. There are 214 local loans outstanding, about 89 percent of which are held by investment-grade borrowers, Standard & Poor's said.

Cochran said the strength of the board's financing comes from its breadth and its depth. ``They're getting the benefit of having a very diverse borrowing pool from Tulsa to Wewoka to Tecumseh, and they're basically combining all of these different borrowers credits together and doing so that improves the whole,'' he said.

The board's $44 million debt service reserve fund also helped secure the improved rating, Cochran said. If one of the borrowers were to default on a loan, that fund could be used to prevent a bond default.

Standard & Poor's complemented the board's strong reserves, absence of any default, strong financial management and scrupulous loan requirements. The firm said the rating outlook is stable.
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