KBRA Affirms AA Rating for Narragansett Bay Commission (RI) WIFIA Loans; Outlook Stable
23 Sep 2025 | New York
KBRA affirms the long-term rating of AA with a Stable Outlook for the Narragansett Bay Commission’s ("NBC" or the "Commission") Combined Sewer Overflow ("CSO") Phase III Facilities Water Infrastructure Finance and Innovation Act loan (WIFIA) and the Bucklin Point Resiliency Improvements WIFIA loan. The rating affirmation reflects NBC's sound financial performance supported by timely and adequate sewer rate increases, a diverse customer base with competitive sewer rates, and solid security provisions supporting the WIFIA loans. For the past five years debt service coverage has been solid and in excess of the 1.25x rate covenant.
Counterbalancing the aforementioned strengths is regulatory oversight of NBC’s rate setting by the Rhode Island Public Utility Commission (PUC), and the size and scope of the Commission’s largely debt funded capital program through 2041.
Key Credit Considerations
The rating is affirmed because of the following considerations:
Credit Positives
- Favorable history of rate setting, with the ability to use an expedited regulatory rate review process to maintain adequate debt service coverage.
- Largely residential and modestly growing customer base, with competitive wastewater rates.
- Comprehensive long-term financial and capital planning process which is updated on an annual basis.
Credit Challenges
- Rate increases are subject to regulatory review by the state’s PUC. Positively, NBC has a history of constructive rate reviews by the PUC.
- Higher complexity and implementation risk related to the CSO Phase III projects.
- Leverage, as measured by total debt to net plant, and debt service requirements are rising as NBC funds the large capital program. DSC is projected to approximate the rate covenant over the five-year forecast.
Rating Sensitivities
For Upgrade
- Under budget completion of NBC’s large capex, with lower debt requirements and financial coverage materially above the projected minimally required debt service coverage.
For Downgrade
- Less favorable rate regulatory environment, with debt service coverage below financial projections.
To access ratings and relevant documents, click here.