Fitch U.S. Muni Surveillance: Toledo, OH's Water Revs Affirmed at 'A+'

AUSTIN, Texas--(Business Wire)--
In the course of routine surveillance, Fitch Ratings affirms the 'A+' rating on
Toledo, Ohio's (the city) $80.4 million of outstanding senior lien water revenue
bonds. The bonds are payable from a senior lien on and pledge of the net
revenues of the city's water system (the system). The Rating Outlook is Stable.

The 'A+' rating reflects the system's good financial performance, manageable
capital plan, and low leverage ratios. The rating also reflects limited impact
from the automotive industry's recent decline and some user concentration among
its top 10 users, though exposure has declined from earlier levels. Financial
performance is expected to remain adequate for the rating level given the modest
capital pressures and proposed rate hikes.

The financial performance of the city's water system has been good. Senior
annual debt service coverage (ADS) was 1.5 times (x) in fiscal 2007. Projected
debt service coverage is expected to produce similar results. Liquidity for
fiscal 2007 was also strong at 706 days cash on hand. Days working capital was
similar, averaging 990 days over the past five years. Given that approximately
24% of the capital improvement plan (CIP) will be funded with cash, liquidity
should remain strong over the next five years.

The city's fiscal 2009-2013 CIP totals a moderate $67 million, down 41% from
fiscal 2005 estimates. The decline is mostly attributed to the city's recent
completion of its milestone water main extension project to serve the city's
east side. Approximately 76% of the capital plan is forecasted to be debt-funded
with the remainder to be funded with cash. Leverage ratios compare very
favorably with comparable ratings, with total outstanding long-term debt per
customer at $733 for fiscal 2007 versus the 'A' category median of $1,875.
Despite the planned leverage, projected debt per customer over the next five
years is also expected to remain below the 'A' medians.

The city's top 10 water customers accounted for a relatively high 23% of
operating revenues in fiscal 2008, led by Sun Oil Refining & Marketing Co.
Nevertheless, other large users are stable wholesale customers that include
Monroe County, the City of Perrysburg, the City of Maumee, the City of Sylvania
and Fulton County.

In fiscal 2007, the system served approximately 521,000 people. The city
operates one water treatment facility, which serves not only the city, but also
customers in certain surrounding areas. Water is drawn from Lake Erie. In fiscal
2008, the water system produced an average of 77 million gallons of water per
day (mgd) for approximately 136,000 residential, commercial and industrial
customers in the area. The system is in good operating condition and is in
compliance with current federal and state requirements.

Toledo is the county seat of Lucas County, located in northwestern Ohio. The
city's economy is driven by manufacturing, health care, education and local
government. The unemployment rate, measured at a high 14.3% in May 2009, is
above county, state and national levels. Despite the rising unemployment,
delinquency rates remain reasonable at around 1.4% in fiscal 2008. Per capita
personal income levels in the city are 75% and 70% of state and national
averages, respectively.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Julie Seebach, +1-512-215-3740 (Austin)
Melanie A.J. Shaker, +1-312-368-3143 (Chicago)
Media Relations:
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com

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