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Extra Credit - 2020 Sector Outlook: Water-Sewer, Public Power, Transportation


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Listen: Extra Credit - 2020 Sector Outlook: Water-Sewer, Public Power, Transportation

As with all good things, the season for 2020 Sector Outlooks has come to an end here at Extra Credit. Host, Peter Murphy, rounds out our third and final presentation of U.S. Public Finance sector outlooks with Sector Leaders Kurt Forsgren, David Bodek, and Theodore Chapman as they preview credit events to monitor this upcoming year for Transportation Infrastructure, Public Power & Rural Electric Cooperatives, and Water-Sewer Utilities.

    • Kurt Forsgren, Managing Director and Transportation Infrastructure Sector Leader, discusses rating trends, criteria changes and outlooks for airports, ports, toll roads and transit. For 2020, the airport and toll road sectors outlooks are positive due to continued operational trends while ports was revised to negative because of China trade and tariff uncertainties.  The transit sector continued with its negative outlook due to the continued weak ridership trends at many large systems resulting in stagnant fare box revenues against growing needs. Trends across all transportation sectors continue to include large and growing capital requirements and a focus on asset resiliency and climate-related risks. Read the 2020 S&P Global Ratings outlook for Transportation Infrastructure.

    • David Bodek, Managing Director and Public Power Sector Leader, highlights the effects of California wildfires and utilities’ fire mitigation plans on their credit ratings, the technological and operational challenges of transitioning to more renewable energy resources, and the benefits that more than a decade of low natural gas prices provides to electric utilities. David concludes that the Public Power sector carries a stable outlook, despite increasingly stringent emissions mandates, due in large part to the financial flexibility that flows from ratemaking tools that solidify prospects for cost recovery. Discover more about what S&P Global Ratings is monitoring in the Public Power sector.

    • Ted Chapman, Senior Director and Water-Sewer Utilities Sector Leader, notes the persistent challenge for the stable sector remains separating headline risk from associated credit implications. Per- and poly-fluoroalkyl (PFAS) substances in water and the associated treatment point to increased operating and maintenance costs, however the impacts of PFAS are not expected to be widespread. Though there is a considerable amount of pending legislation, Ted explains the most impact could come from a requirement for systems to perform vulnerability self-assessments and develop contingencies for emergency scenarios. Overall, members of American Water Works Association have an improved sentiment of the sector which further supports the stable outlook. Learn more about the S&P Global Ratings Water-Sewer outlook. 

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