Overview
S&P Global Ratings took 39 rating actions, 31 outlook revisions, and one CreditWatch action within the U.S. municipal water and sewer utilities sector in the fourth quarter of 2022. In addition, 76 ratings were maintained with no outlook revisions. We placed one rating on CreditWatch with negative implications.
Table 1
U.S. Municipal Water And Sewer Utilities Rating Actions, Year-To-Date 2022 | ||||
---|---|---|---|---|
First quarter | Second quarter | Third quarter | Fourth quarter | |
New ratings | 12 | 12 | 5 | 15 |
Upgrades | 6 | 9 | 32 | 16 |
Downgrades | 11 | 3 | 8 | 8 |
Favorable outlook revisions | 9 | 9 | 10 | 17 |
Unfavorable outlook revisions | 7 | 3 | 3 | 14 |
Removed from CreditWatch | 3 | 3 | 4 | 0 |
CreditWatch with negative implications | 2 | 7 | 2 | 1 |
Maintained ratings with no outlook revisions | 82 | 61 | 72 | 76 |
Positive rating actions were double negative actions, with 16 upgrades compared with eight downgrades in the fourth quarter. Favorable outlook revisions outpaced unfavorable as well, although the majority of outlook revisions returned to stable from negative; 14 ratings were assigned negative outlooks, significantly outpacing the four positive outlooks.
Bond issuance rebounded from the yearly low in third quarter 2022 but is still trending lower than the same period the previous year. New ratings declined by more than half between 2021 and 2022. Rating movement remains elevated from the previous year but has slowed since a peak in third quarter 2022, with 24 rating changes in the fourth quarter. Maintained ratings remained on pace with 2021.
Fourth Quarter Rating Actions
In fourth quarter 2022, we raised 16 ratings primarily due to economic growth that strengthened financial performance and long-term rate plans that improved all-in coverage levels. Also contributing was sustained liquidity growth.
We also lowered eight ratings in the fourth quarter. Negative rating actions were primarily fueled by hydrological volatility putting pressure on fixed costs or deterioration in financial performance due to pandemic pressures.
Fourth Quarter Outlook Revisions And CreditWatch Actions
During the fourth quarter, we revised 14 outlooks to negative and four to positive. The positive outlooks were driven by our anticipation that rate increases, or economic growth, would improve financial performance. Negative outlooks primarily reflected sizable capital programs that could weaken financial metrics due to additional debt needs. Of the 13 outlooks that were revised to stable, most reflected growth in liquidity reserves.
We placed one rating on CreditWatch with negative implications, Prichard Waterworks and Sewer Board, Ala., due to elevated governance risk, which ultimately led to a rating withdrawal.
The following tables summarize S&P Global Ratings' quarterly rating actions for U.S. municipal water and sewer utilities. All rating actions are based on our criteria.
Table 2
U.S. Municipal Water and Sewer Utilities Rating Actions, Summary Fourth Quarter 2022 | |||||||
---|---|---|---|---|---|---|---|
Entity | State | Rating | Outlook | CreditWatch | Rating action description | ||
To | From | To | From | ||||
Holly Village (sewer) | MI | A | A- | Stable | Stable | Improved financial metrics due to recent rate increases | |
Village Center Community Development District (Little Sumter Service Area) | FL | AA- | A+ | Stable | Stable | Expanded customer base leading to stronger financial metrics | |
Holly Village (water) | MI | A+ | A | Stable | Stable | Improved financial metrics due to recent rate increases | |
Arvada (water) | CO | AA+ | Stable | New rating | |||
Village Center Community Development District (Village Center Service Area) | FL | AA | A+ | Stable | Stable | Expanded customer base leading to stronger financial metrics | |
Arvada (wastewater) | CO | AA- | Stable | New rating | |||
Prichard Waterworks & Sewer Board | AL | CCC | B | Not meaningful | Not meaningful | Negative | Rating withdrawn due to lack of timely information |
Missoula (water) | MT | A+ | A+ | Negative | Stable | Weakened coverage due to recent non-cash pension expenses | |
Missoula (sewer) | MT | A+ | A+ | Negative | Stable | Weakened coverage due to recent non-cash pension expenses | |
Atlantic County Utility Authority | NJ | AA- | Stable | New rating | |||
North Kern Water Storage District | CA | A | A+ | Stable | Negative | Weakened financial performance brought on by hyrdological volatility | |
Coalinga | CA | BB+ | BBB- | Negative | Stable | Insufficient water supply caused by severe drought conditions | |
Bell County Water Control & Improvement District #3 | TX | A | Stable | New rating | |||
Charleston | WV | A | AA- | Stable | Stable | Uncertainty regarding funding for the city's significant capital improvement plan | |
Liberty Hill | TX | A+ | Stable | New rating | |||
Douglasville-Douglas County Water & Sewer Authority | GA | AA | AA- | Stable | Stable | Strong financial performance supported by local economy | |
Chattanooga | TN | AA | Stable | New rating | |||
North Collin Special Utility District | TX | A | Stable | New rating | |||
Timpanogos Special Service District | UT | AA | AA- | Stable | Stable | Improvement in financial performance due to growth in service area | |
North & South Shenango Joint Municipal Authority | PA | BBB+ | BBB | Stable | Stable | Improved coverage metrics driven by rate increases | |
Davis | CA | A+ | A- | Stable | Stable | Transition to a surface water supply, coupled with improved financial metrics | |
Clayton | NC | AA- | Stable | New rating | |||
Anchorage | AK | AA | Stable | New rating | |||
Northeastern Schuylkill Joint Municipal Authority | PA | BB+ | BBB- | Stable | Negative | Volatile financial performance caused by customer delinquencies | |
New Hampshire Municipal Bond Bank | NH | AA+ | AA | Stable | Stable | Reduced financial risk given the bank's support from the state to pay debt service | |
Allegheny County Sanitary Authority | PA | AA- | A+ | Stable | Stable | Proactive capital and financial planning coupled with willingness to adjust rates | |
Hilton Head Island Public Service District #1 | SC | AA+ | Stable | New rating | |||
Hamburg Township | MI | A+ | A | Stable | Stable | Strengthened coverage due to declining debt service payments | |
Village of Waterford | WI | A+ | Stable | New rating | |||
San Bernardino Municipal Water Department | CA | A+ | A | Stable | Stable | Resilient financial performance during economic slowdown, coupled with rate plan | |
Artesia | Not meaningful | A- | A | Stable | Stable | Declining revenues caused by pressure from the pandemic, resulting in volatile coverage | |
Sandwich Water District | MA | AA | Stable | New rating | |||
Olympia | WA | AA+ | AA | Stable | Stable | Strong management policies contributing to Stable finances | |
Eastman | GA | BBB | A- | Negative | Stable | Weakened financial metrics due to increasing operating expenses | |
Amarillo | TX | AA+ | AAA | Stable | Negative | Coverage projected to weaken due to increased debt burden | |
Guadalupe-Blanco River Authority | TX | A+ | Stable | New rating | |||
Northampton Boro Municipal Authority | PA | AA- | A+ | Stable | Stable | Consistently strong financial metrics supported by rate increases | |
Pittsburgh Water & Sewer Authority | PA | A+ | A | Stable | Stable | Rate increases and conservative budgeting that will continue to support finances | |
Clearwater | FL | AA+ | AA | Stable | Stable | Growing liquidity due to reallocation of earmarked funds | |
Windsor Village | WI | A+ | Stable | New rating | |||
Hammond | IN | BBB | Stable | New rating | |||
New Kensington Municipal Sanitary Authority | PA | A+ | A+ | Stable | Negative | Robust liquidity which should insulate the utility from higher debt costs | |
Delano-Earlimart Irrigation District | CA | AA- | AA- | Stable | Negative | High demand from agriculture customer base and diverse revenue streams reduce credit risk | |
Randall Community Water District | SD | A | A | Negative | Stable | Increased financial risk from declining cash reserves and future debt needs | |
Zionsville | IN | AA- | AA- | Negative | Stable | Heightened governance risks from limited financial transparency and staff turnover | |
Cape Coral | FL | A+ | A+ | Negative | Stable | Expected decline of connection fee revenue due to Hurricane Ian, which could pressure coverage | |
Frankfort | KY | AA- | AA- | Negative | Stable | Increased financial risk from future debt plans and capital needs | |
Silver City Town | Not meaningful | BBB+ | BBB+ | Stable | Negative | Stablization of service area following the effects of the pandemic on the local economy | |
Rosedale-Rio Bravo Water Storage District | CA | A | A | Stable | Negative | Importance of the district's water supply to regional demand will help maintain finances | |
Humboldt Community Services District | CA | A- | A- | Stable | Negative | Improvements in financial metrics which should be supported with planned rate increases | |
Brighton | CO | AA | AA | Negative | Stable | Significant debt plans could lead to weakened financial metrics | |
Spotsylvania County | VA | AA | AA | Positive | Stable | Strong coverage and liquidity levels which are expected to continue despite capital needs | |
Thomasville Waterworks & Sewer Board | AL | BBB | BBB | Negative | Stable | Financial metrics could become pressured given uncertainty about future rate increases | |
Phenix City | AL | BBB+ | BBB+ | Stable | Negative | Financial profile should remain Stable given planned rate increases | |
Columbus | OH | AA | AA | Stable | Negative | Strong liquidity reserves which should be supported with rate increases and a debt funded CIP | |
El Paso De Robles | CA | AA- | AA- | Negative | Stable | Increasing fixed costs could result in diminished financial capacity | |
United Water Conservation District | CA | AA- | AA- | Stable | Negative | Importance of the district's water supply to regional demand will help maintain finances | |
Development Finance Authority of Summit County | OH | A- | A- | Positive | Stable | Expectation that management will continue to add to and diversify pledged reserves | |
Winters | CA | A- | A- | Positive | Stable | Continually strong financial metrics which are anticipated to improve due to customer growth | |
Wilkinsburg Penn Joint Water Authority | PA | AA- | AA- | Stable | Negative | Resilient coverage and liquidity position, which should remain Stable against higher debt costs | |
Centre Water Works and Sewer Board | AL | A | A | Negative | Stable | Declining coverage that could become further pressured by rising debt serivce and expenses | |
Conway | AR | A+ | A+ | Negative | Stable | Coverage and thin liquidity reserves may become under pressure from inflationary costs | |
Eastern Adams County Metropolitan District | CO | BBB | BBB | Positive | Stable | Improving financial metrics that could continue to strengthen with further customer growth | |
Gas City | IN | BBB+ | BBB+ | Negative | Stable | Thinning cash and significant capital needs could pressure the city's financial metrics | |
Eufaula Waterwks & Sewer Board | AL | A | A | Stable | Negative | Stable customer base and future rate increases are expected to support strong financial metrics |
Table 3
U.S. Municipal Water And Sewer Utilities Affirmed Ratings, Summary Fourth Quarter 2022 | |||
---|---|---|---|
Entity | State | Rating | Outlook |
Genoa-Oceola Sewer & Water Authority | MI | AA | Stable |
Virginia Resources Authority | VA | AAA | Stable |
Indiana Finance Authority | IN | AAA | Stable |
Bucks County Water & Sewer Authority | PA | A+ | Stable |
Monterey County Financing Authority | CA | AA- | Stable |
Greenbrier Public Service District #1 | WV | A- | Stable |
California State Water Resources Control Board | CA | AAA | Stable |
California Infrastructure & Economic Development Bank | CA | AAA | Stable |
Charleroi Borough Authority | PA | A | Stable |
Kansas City | MO | AA | Stable |
New York State Environmental Facilities Corporation | NY | AAA | Stable |
Arkansas Development Finance Authority | AR | A+ | Stable |
New Mexico Finance Authority | NM | AAA | Stable |
Kentucky Rural Water Financing Corp | KY | A+ | Stable |
Social Circle | GA | A+ | Stable |
Wildwood Utilityity Dependent District | FL | BBB+ | Positive |
New York State Environmental Facilities Corporation | NY | AAA | Stable |
Winston-Salem | NC | AAA | Stable |
Guadalupe-Blanco River Authority | TX | AA+ | Stable |
Montgomery County | MD | AA+ | Stable |
Castro Valley Sanitary District | CA | AA | Stable |
Ohio Water Development Authority | OH | AAA | Stable |
Lake Jackson | TX | AA- | Stable |
Manassas Park | VA | AAA | Stable |
Prince William County | VA | AAA | Stable |
New Jersey Infrastructure Bank | NJ | AAA | Stable |
Columbia | SC | AA+ | Stable |
Riverside | CA | AA+ | Stable |
Los Angeles Deptartment of Water & Power | CA | AA+ | Stable |
Wisconsin (State of) | WI | AAA | Stable |
Wellborn Special Utility District | TX | A+ | Stable |
California Infrastructure & Economic Development Bnk | CA | AAA | Stable |
Ohio Water Development Authority | OH | AAA | Stable |
California State Water Resources Control Board | CA | AAA | Stable |
Scottsdale | AZ | AAA | Stable |
New Jersey Infrastructure Bank | NJ | AAA | Stable |
Colton Utility Authority | CA | A+ | Stable |
Stanley | WI | A | Stable |
Lee County | FL | AA+ | Stable |
Maine | ME | AAA | Stable |
Milliken Town | CO | A+ | Stable |
Los Angeles | CA | A+ | Stable |
South Dakota Conservancy District | SD | AAA | Stable |
Indiana Finance Authority | IN | AAA | Stable |
Liberty Hill | TX | A+ | Stable |
Temple | TX | AA | Stable |
Clinton Public Waterworks Authority | OK | A | Stable |
New York State Environmental Facilities Corporation | NY | AAA | Stable |
Knoxville Utilities Board | TN | AA+ | Positive |
Massachusetts Clean Water Trust | MA | AAA | Stable |
Manassas | VA | AAA | Stable |
Fort Myers | FL | A+ | Stable |
Merrillville Conservancy District | IN | A | Stable |
Lake Como Sanitary District No 1 | WI | A | Stable |
Amarillo | TX | AA+ | Stable |
New Hampshire Municipal Bond Bank | NH | AA+ | Stable |
Connecticut | CT | AAA | Stable |
Grand Prairie | TX | AAA | Stable |
Tarpon Springs | FL | AA- | Stable |
Minnesota Public Facilities Authority | MN | AAA | Stable |
Fairfax County | VA | AAA | Stable |
New York City Municipal Water Finance Authority | NY | AAA | Stable |
Dayton | OH | AA- | Stable |
East Cedar Creek Fresh Water Supply District | TX | A | Stable |
New Mexico Financing Authority | NM | AAA | Stable |
Maine Municipal Bond Bank | ME | AAA | Stable |
Pennsylvania Infrastructure Invest Authority | PA | AAA | Stable |
Owensboro-Daviess County Regional Water Resource Agency | KY | A+ | Stable |
New Hampshire Municipal Bond Bank | NH | AA+ | Stable |
Cleveland-Cuyahoga County Port Authority | OH | A- | Stable |
Johnstown City Redevelopment Authority | PA | BB | Stable |
Kansas City | MO | AA+ | Stable |
California Infrastructure & Economic Development Bank | CA | AAA | Stable |
Enterprise Water Waterworks Board | AL | A | Stable |
White City Water Improvement District | UT | AA- | Stable |
Clifton Water District | CO | AA- | Stable |
This report does not constitute a rating action.
Primary Credit Analyst: | Jaime Blansit, Englewood + 1 (303) 721 4279; jaime.blansit@spglobal.com |
Secondary Contact: | Jenny Poree, San Francisco + 1 (415) 371 5044; jenny.poree@spglobal.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.