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U.S. Municipal Water And Sewer Utilities Rating Actions, Fourth Quarter 2022

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U.S. Municipal Water And Sewer Utilities Rating Actions, Fourth Quarter 2022

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.

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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

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