S&P Global Ratings lowered its rating two notches to 'BB+' from 'BBB' on the town of Mulga, Ala.'s (Mulga, or the utility) combined water and gas utility revenue bonds. The outlook is negative. The downgrade reflects our view of Mulga's weak risk management, culture, and oversight, including rate covenant violations in fiscals 2022 and 2023 by failing to produce debt service coverage of at least 1.1x and audits withing 150 days of fiscal year-end. The 2022 audit, as well as prior audits, have been significantly delayed, reducing transparency of material events. The negative outlook reflects our view that the rate adjustments implemented in late calendar 2023 may not be sufficient to produce coverage above 1.1x in fiscal 2024, as required
