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Omaha Metro.Util.Dist. NE Gas Ent. — Moody’s assigns Aa2 to Omaha MUD, NE’s gas revenue bonds

Rating Action: Moody’s assigns Aa2 to Omaha MUD, NE’s gas revenue bondsGlobal Credit Research – 14 Feb 2022New York, February 14, 2022 — Moody’s Investors Service has assigned a Aa2 rating to the Omaha Metropolitan Utilities District, NE’s $118 million Gas System Revenue Bonds, Series 2022. Moody’s maintains the districts Aa2 issuer rating and the Aa2 rating on the district’s outstanding gas revenue bonds. Following the sale, the district will have about $146 million in gas revenue bonds. The outlook is stable.RATINGS RATIONALEThe Aa2 rating reflects a stable service area that covers parts of Douglas, Sarpy, and Washington counties with lack of competition or top user concentration, very strong and improving liquidity and management’s strong rate-setting authority with the ability to pass on increases in commodity prices monthly. The rating also reflects the district’s consistently strong operating performance with current fiscal 2021 estimates that the show the year outperformed budget and that operations were stronger than the prior year. Fiscal 2020 debt service coverage was exceptionally strong at about 17x and debt to revenue was very modest at less than 0.2x. Following the issuance of the 2022 bonds, the pro-forma debt service coverage drops to closer to 5x and debt to revenue increases to about 0.8x. Despite the weakening of these metrics, debt to revenue and debt service coverage will remain strong for the Aa2 rating and the district’s plans for additional borrowing during the next few years are relatively modest.RATING OUTLOOKThe stable outlook on the gas enterprise reflects the expectation that the utility will continue its historical trend of consistently strong financial performance while continuing to update and modernize its infrastructure where necessary. Although the coronavirus pandemic was disruptive for the gas enterprise and its customer base, the ongoing effects will not likely have a material impact on the financial performance of the enterprise as liquidity and debt service coverage are expected to remain strong.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING- Material growth in the service area and strengthening of resident incomes- Materially improved liquidity- Continued investments in the systems infrastructure without pressuring financial metricsFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING- Material contraction of the customer base or significant increase in delinquencies that threaten the ability to recover costs- Significantly weakened liquidity- Substantially increased leverageLEGAL SECURITYThe 2022 bonds are supported by a pledge of and lien on net revenue of the gas enterprise and are payable on a parity with the district’s outstanding revenue bonds.Legal covenants include a 1.20x rate covenant and there is no debt service reserve fund associated with either the 2018 bonds or the 2022 bonds.USE OF PROCEEDSProceeds will finance a portion of the continued replacement of the cast iron mains throughout the district’s gas system and the expansion of and improvements to the district’s liquified natural gas plant and related infrastructure improvements.PROFILEThe Omaha Metropolitan Utilities District was created in the early 1900s as a political subdivision by the State of Nebraska (Aa1 stable) to provide water and gas service to the Omaha metropolitan area. The district is governed by an elected board of directors that serve six-year terms and is the only metropolitan utility district in the state. The district owns and operates one liquefied natural gas (LNG) plant and two propane-air plants, and the system has almost 3,000 miles of gas mains and 10 town border stations. Gas is supplied through various contracts, including natural gas prepay transactions that provide a significant discount to the natural gas index price. In addition to the gas system, the district operates the region’s water enterprise system (Omaha Metropolitan Utilities District, NE Water Enterprise: Aa2 stable).METHODOLOGYThe principal methodology used in this rating was US Municipal Utility Revenue Debt published in October 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1095545. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Benjamin VanMetre Lead Analyst REGIONAL_MIDWEST Moody’s Investors Service, Inc. 100 N Riverside Plaza Suite 2220 Chicago 60606 JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 David Strungis Additional Contact REGIONAL_MIDWEST JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. 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However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.Additional terms for Japan only: Moody’s Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody’s Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. 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MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. ​

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2022-02-14 19:08:58

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