articles Ratings /ratings/en/research/articles/240430-u-s-municipal-water-and-sewer-utilities-rating-actions-first-quarter-2024-13089434.xml content esgSubNav
In This List
COMMENTS

U.S. Municipal Water And Sewer Utilities Rating Actions, First Quarter 2024

COMMENTS

Table Of Contents: S&P Global Ratings Credit Rating Models

COMMENTS

Rethinking The American Dream Of Homeownership In New York City

COMMENTS

Your Three Minutes In The Greenhouse Gas Reduction Fund: Efficient Networks Put U.S. CDFIs In Good Position To Lead Change

COMMENTS

U.S. Not-For-Profit Health Care Rating Actions, April 2024


U.S. Municipal Water And Sewer Utilities Rating Actions, First Quarter 2024

Overview

S&P Global Ratings took 36 rating actions, made 12 outlook revisions, and made 74 CreditWatch actions within the U.S. municipal water and sewer utilities sector in first-quarter 2024. Seventy-two ratings were maintained with no outlook revisions. One rating was removed from CreditWatch and 73 were placed on CreditWatch with negative implications.

Table 1

U.S. Municipal Water & Sewer Utilities Rating Actions, Year-To-Date 2024
New rating 17
Upgrade 8
Downgrade 11
Favorable outlook revision 7
Unfavorable outlook revision 5
Removed from CreditWatch 1
CreditWatch with negative implications 73
Maintained ratings with no outlook revision 72
Developing outlook 1

Negative rating actions exceeded positive ones by eleven to eight. Favorable outlook revisions exceeded unfavorable ones by seven to five.

Bond issuance in the sector increased in the first quarter of 2024 to a greater extent than in any quarter in 2023. Ten more new ratings were assigned than in first-quarter 2023. Rating movement also increased, with ten more changes in the first quarter than in first-quarter 2023. Rating pressure was similar to that of first-quarter 2023, with more negative rating actions than positive ones.

First-Quarter Rating Actions

In first-quarter 2024, we lowered eleven ratings and raised eight.

Negative rating actions were primarily due to deteriorating all-in debt service coverage (DSC) and liquidity reserves or to environmental, social, and governance (ESG) factors such as limited transparency, poor risk management, and exposure to climate risks. This is consistent with trends forecast by our outlook, which cited a rising likelihood of narrowing margins and a more complex operating environment, as discussed below.

Positive rating actions were primarily driven by improving financial metrics that were usually the result of strong management policies and practices, often related to rate-setting.

First-Quarter Outlook Revisions And CreditWatch Actions

In the first quarter, we revised one outlook to negative, one to positive, one to developing, and six to stable.

The negative outlook revision was driven by declining DSC metrics due to rising operating expenses. The positive outlook revision reflected strong financial performance that we believe is sustainable given sound financial management practices. Of the six outlooks revised to stable, most were due to proactive management policies and practices that addressed concerns with future financial and operational stability. The developing outlook revision reflected our view on the uncertainty regarding proposed acquisition of a wastewater system by a private operator.

We placed 73 ratings on CreditWatch with negative implications. Thirty-nine were for utilities that had yet to provide S&P Global Ratings with fiscal 2022 financial statements, which we require to maintain timely ratings. Thirty-three followed an analytical error identified in our economic fundamentals assessment (for more, see below). Elevated governance risk related to transparency and reporting drove the remaining CreditWatch action, whereas risk management, culture and oversight, also governance risks, drove the entity's subsequent downgrade.

First-Quarter Lookback

During the first quarter, S&P Global Ratings published its outlook for U.S. municipal utilities. Our view on the sector is stable, supported by proven cost recovery, substantial financial cushion, and prudent planning. Rising costs will likely compound rate pressures, especially as American Rescue Plan Act (APRA) funds are depleted and disposable personal income shrinks. For more information, see "U.S. Water Utilities 2024 Outlook: Managers Navigate Rising Risks From A Position Of Strength," published Jan. 18, 2024, on RatingsDirect.

Common features of our 'AAA' rated utilities include above-average median household effective buying incomes, superior operational and financial management policies, and larger economies of scale. A high proportion of our 'AAA' rated utilities are in states with higher climate-related risks, but we believe this risk is offset by strong management policies and practices. For more information, see "'AAA' Rated U.S. Water/Sewer/Drainage Utilities: Current List," published Feb. 13, 2024.

During the first quarter, S&P Global Ratings identified an analytical error related to our economic fundamentals assessment of municipal water, sewer, and solid-waste utilities. Following an initial review of the approximately 1,900 ratings affected by this error, we have determined that we could change the rating or revise the outlook on approximately 2% based on our resolution of the error and the utility's current credit fundamentals, which were a leading factor in our placement of ratings on CreditWatch this quarter. For more information, see "Error In Our Economic Fundamentals Assessment Triggers Review Of Public Municipal Utility Sector Ratings," published Feb. 23, 2024.

Lastly, various U.S. utility ratings were placed on CreditWatch Negative due to their failure to provide fiscal 2022 financial statements, which we consider necessary to maintain and assess our ratings on these issuers. For more information, see "Various U.S. Local Government, Public Power, Utility, And Transportation Ratings Placed On CreditWatch Negative," published March 6, 2024.

image

Table 2

U.S. Municipal Water And Sewer Utilities Rating Actions, Summary First Quarter 2024
Entity State Rating to Rating from Outlook to Outlook from CreditWatch to Reason for rating
Saraland Board Water & Sewer Commissioners Al A+ A+ NM Stable Negative Lack of timely information
Midland TX AA- AA- NM Stable Negative Lack of timely information
Alexandria IN BB+ BBB+ Stable Stable Downgrade reflects our view on debt service coverage below sufficiency and low liquidity
Butler Area Sewer Authority PA A A Developing Stable Outlook revision reflects our view on the uncertainty regarding proposed acquisition of the wastewater system by a private operator
Atlantic IA A A NM Stable Negative GCP analytical error
Sanger CA A A NM Stable Negative Lack of timely information
Jackson MS BB- BB- NM Stable Negative Placed on CreditWatch Negative due to info quality concerns coupled with financial deterioration
Greene County Water and Sewer Authority AL BBB+ BBB+ NM Stable Negative GCP analytical error
Caryville & Jacksboro TN A A NM Stable Negative GCP analytical error
Farmington Village Corporation ME A- A- NM Stable Negative Lack of timely information
Centennial Water & Sanitation District CO AAA AAA Negative Stable Outlook revision reflects our view on the recent decrease in debt service coverage metrics
Randall Community Water District SD A A NM Negative Negative GCP analytical error
Iowa Falls IA A+ A+ NM Stable Negative GCP analytical error
University Area Joint Authority PA A- A Stable Stable Downgrade reflects our view on the insufficient coverage resulting in a debt service reserve draw
Eastern Municipal Water District CA AAA AA+ Stable Positive Upgrade reflects our view on the exceptional financial metrics and strong management practices
Amarillo TX AA AA+ Stable Stable Downgrade reflects our view of the increased debt burden with the series 2024 bonds reducing the utility's operating flexibility, coupled with low nominal liquidity for the rating level
Jackson County Utility Authority MS BBB+ BBB+ NM Stable Negative Lack of timely information
Santa Maria CA AA- AA- NM Stable Negative Lack of timely information
Thomasville Waterworks & Sewer Board AL BBB BBB Stable Negative Outlook revision reflects our view on the expectation for financial profile to improve as the board has acquired a new wholesale customer, passed a rate increase, and received significant grants to complete system upgrades.
Hale County Water Authority AL A A NM Stable Negative GCP analytical error
Baltimore Mayor & City Council MD A+ A+ Stable Negative NM Outlook revision reflects our view of the city's recently completed projects, which improve the overall health and safety of the region's water supply and lower the city's potential liabilities
West Autauga Water Authority AL A A NM Stable Negative Lack of timely information
Pasadena CA AAA AA+ Stable Positive Upgrade reflects our view on the strengths in operational management related to water supply and a comprehensive rate structure
Mid Cameron Authority PA BBB+ BBB+ NM Stable Negative Lack of timely information
Vallejo Flood and Wastewater District CA AA AA- Stable Stable Upgrade reflects our view on the comprehensive long-term planning supporting strengthened financial metrics
Iowa Falls IA A+ A+ NM Stable Negative GCP analytical error
Wyoming MI AA- NR Stable NR NM New rating
Lapel Town IN A- A- NM Stable Negative GCP analytical error
Odessa TX AA- AA- NM Stable Negative Lack of timely information
Marshall County TN A- Stable New rating
Upper Bear Creek Water Sewer & Fire Protection District AL A+ A+ NM Negative Negative Lack of timely information
Eastman GA BBB- BBB Stable Negative Downgrade reflects our view on the limited economy coupled with lack of comprehensive planning leading to continued uncertainty for future financial metrics
La Crosse WI A+ Stable New rating
Livingston CA A- A- NM Stable Negative Lack of timely information
Crystal Clear Special Utility District TX A Stable New rating
Trinity River Auth TX AA- Stable New rating
Humboldt Community Services District CA A- A- NM Stable Negative Lack of timely information
The Water Works and Sewer Board of the Town of Sardis City AL A A NM Stable Negative GCP analytical error
Cartersville GA AA- AA- Stable Positive Outlook revision reflects our view on the potential financial pressures due to plans for additional debt for system expansions
Moses Lake WA AA- AA- NM Stable Negative Lack of timely information
Montecito Sanitary District CA AA+ AA+ NM Stable Negative Lack of timely information
Dallas Area Municipal Authority PA A A NM Stable Negative Lack of timely information
Oakman Water Works Board AL A- A- NM Stable Negative GCP analytical error
South Davis Sewer District UT BBB+ A NM Stable Developing Downgrade reflects our view on the continued financial deterioration and underperformance in capital projects
Lebanon IN AA- Stable New rating
Wheeling WV A A NM Stable Negative GCP analytical error
Manteca CA AA- AA- Stable NM Received timely financial information
Cumberland Mountain Water & Fire Protection Authority AL A A NM Negative Negative GCP analytical error
Lehigh County Authority PA A+ A Stable Stable Upgrade reflects our view on the improving financial profile supported by healthy rate increases
Silver City Town NM BBB+ BBB+ NM Stable Negative GCP analytical error
Maryville MO A+ A+ NM Stable Negative GCP analytical error
Spanish Fork City UT AA- A+ Stable Stable Upgrade reflects our view on the improved financial position supported by healthy rate plans
Auburn IN A+ A+ NM Stable Negative GCP analytical error
Grand Junction CO AA- NR Stable NR New rating
Village of Cassopolis MI BBB A- Stable Stable Downgrade reflects our view on the weakening liquidity and economic metrics
South Middleton Township Municipal Authority PA AA- AA- NM Stable Negative Lack of timely information
Washington IN BBB+ BBB+ NM Stable Negative GCP analytical error
Hollister CA AA- AA- NM Stable Negative Lack of timely information
The Water Works Board of the City of Arab AL A+ A+ NM Stable Negative GCP analytical error
Mountlake Terrace WA AA- AA- NM Stable Negative Lack of timely information
German Township Sewer Authority PA BBB- BBB- NM Stable Negative Lack of timely information
Easton Area Joint Sewer Authority PA A A NM Stable Negative Lack of timely information
Fallbrook Public Utility District CA AA- Stable New rating
Albuquerque Metropolitan Arroyo Flood Control Authority NM AAA AAA NM Stable Negative GCP Analytical error
City of Weatherford TX A+ A+ Positive Stable Outlook revision reflects our view on the improving debt service coverage metrics
Columbus NE AA AA NM Stable Negative GCP analytical error
Marbury Water System AL A+ A+ NM Stable Negative Lack of timely information
Daphne Utilities Board AL AA+ AA+ NM Stable Negative GCP analytical error
City of Bastrop LA A A NM Stable Negative Lack of timely information
Memphis TN AA AA+ Stable Stable Downgrade reflects our view on the rising debt service coupled with a planned draw on liquidity
Huntington Municipal Water Utility IN A+ A+ NM Stable Negative Lack of timely information
Talladega AL A A NM Stable Negative Lack of timely information
King County Water District #111 WA AA- AA- NM Stable Negative Lack of timely information
Enumclaw WA AA- AA- NM Stable Negative Lack of timely information
Butts County, City of Flovilla, City of Jackson, and City of Jenkinsburg Water and Sewer Authority GA A+ A+ NM Stable Negative Lack of timely information
North Bend WA AA- AA- NM Stable Negative Lack of timely information
Telluride Town CO BBB+ BBB- Stable Stable Upgrade reflects our view on the strengthening liquidity metrics
Tyler TX AA+ AA+ NM Stable Negative GCP analytical error
Livingston TX A+ A+ NM Stable Negative GCP analytical error
Anchorage AK AA AA NM Stable Negative Lack of timely information
Snake River Water District CO A Stable New rating
Dillon MT A+ A+ NM Stable Negative Lack of timely information
Imperial CA A A NM Stable Negative Lack of timely information
Phenix City AL BBB+ BBB+ NM Stable Negative Lack of timely information
Stucker Fork Conservancy District IN A A NM Stable Negative GCP analytical error
Portage WI A+ A+ NM Stable Negative GCP analytical error
East Bethlehem Township Municipal Authority PA BBB+ BBB+ NM Stable Negative Lack of timely information
Kenner LA A- A- Stable Negative Outlook revision reflects our view on the ongoing financial support from the city's general operations stabilizing the utility's operations
Washington IN A- A- NM Stable Negative GCP analytical error
Imperial CA A A NM Stable Negative Lack of timely information
Seymour IN A+ A+ NM Stable Negative GCP analytical error
Dale County Water Authority AL A+ A+ NM Stable Negative GCP analytical error
Martin County FL AA+ AA Stable Stable Upgrade reflects our view on the strengthening economic metrics coupled with exceptionally strong debt service coverage and liquidity levels
St. Mary Parish Consolidated Gravity Drainage District No. 2 LA A A NM Stable Negative GCP analytical error
Davis CA A+ A+ NM Stable Negative Lack of timely information
Lake Whatcom Water and Sewer District WA AA- AA- NM Stable Negative Lack of timely information
Terrebonne Parish Consolidated Waterworks District No. 1 LA AA- AA- NM Stable Negative GCP analytical error
Stonegate Village Metropolitan District CO A- A- Stable Negative Outlook revision reflects our view on the stabilizing financial performance with increasing liquidity
Asheville NC AA+ AA+ Stable Positive Outlook revision reflects our view on the relatively weak service area economy and potential rate flexibility pressures given the city's rate plans
Olney TX A- A- NM Stable Negative Lack of timely information
Buffalo Municipal Water Finance Authority NY A+ A+ NM Stable Negative GCP analytical error
Childersburg Alabama WaterWorks Sewer & Gas Board AL BBB+ A- Stable Stable Downgrade reflects our view on the significant decline in debt service coverage and liquidity coupled with volatility from natural gas revenues and a shallow economy
Antigo WI A+ A+ NM Stable Negative GCP analytical error
Frankfort KY A+ AA- Stable Negative Outlook revision reflects our view on the decline in liquidity coupled with significant additional debt which could pressure the financial profile
Cedartown GA A A NM Stable Negative Lack of timely information
Aiken SC AA- Stable New rating
Baltimore Mayor & City Council MD A+ AA- Stable Stable NM Downgrade reflects our view on the deteriorating financial performance, including the depletion of its rate stabilization funds with no plans for replenishment coupled with ongoing operational risks due to aging infrastructure
King County Water District No. 90 WA AA- AA- NM Stable Negative Lack of timely information
Greenfield IN A+ AA- Stable Stable Downgrade reflects our view on the ongoing operational concerns coupled with limited managerial policies and practices
Portage WI A+ A+ NM Stable Negative GCP analytical error
New Albany IN A+ A+ NM Stable Negative GCP analytical error
Brevard County FL AA+ AA Stable Stable Upgrade reflects our view on the strong financial metrics supported by rate adjustments

Table 3

U.S. Municipal Water And Sewer Utilities Maintained Ratings, Summary First Quarter 2024
Entity State Rating Outlook
El Centro CA A+ Stable
Canton TX A Stable
Indian Wells Valley Water District CA A+ Stable
Crystal Clear Special Utility District TX A Stable
Prince William County VA AAA Stable
Chino Hills CA AA+ Stable
Trinity River Authority TX AAA Stable
California Infrastructure & Economic Development Bank CA AAA Stable
Wisconsin (State of) WI AAA Stable
Vermont Bond Bank VT AA+ Stable
San Antonio TX AA+ Stable
Manassas VA AAA Stable
Huntsville TX AA- Stable
Berkeley County SC AA+ Stable
Tahoe-Truckee Sanitation Agency CA AA Stable
Fairfax County VA AAA Stable
Norco CA AA+ Stable
Beaverton OR AA+ Stable
Henry County Water Company MO A- Stable
North Davis Sewer District UT AA+ Stable
El Paso TX AA+ Stable
Chino CA AA+ Stable
Post Falls ID AA Stable
Honolulu Board of Water Supply HI AAA Stable
JEA FL AA+ Stable
South Central Connecticut Regional Water Authority CT AA- Stable
Bloomington IN A+ Stable
Pajaro Valley Water Management Agency CA A Stable
Palmdale Water District CA A Stable
Tulsa Metropolitan Utility Authority OK AA+ Stable
New York City Municipal Water Finance Authority NY AAA Stable
Guam Waterworks Authority GUAM A- Negative
California State Water Resources Control Board CA AAA Stable
New York State Environmental Facilities Corporation NY AAA Stable
Washington Suburban Sanitary District MD AAA Stable
Rock Hill SC A+ Stable
Cumberland Utility District TN AA- Stable
Board of Water and Sewer Commissioners of the City of Boaz AL BBB+ Stable
Keokuk Municipal Water Works IA BBB+ Stable
Cleveland-Cuyahoga County Port Authority OH A- Stable
City of Chicago IL A+ Stable
Cleveland OH A+ Stable
Santa Ana River Water Company CA AA+ Stable
Oklahoma Water Resources Board OK AAA Stable
Norwalk CA AA- Stable
Rural Water Financing Agency KY AA- Stable
Valparaiso IN A+ Stable
Leesburg FL AA- Stable
East Bay Municipal Utility District CA AAA Stable
Columbus-Franklin County Finance Authority OH A- Stable
Manassas Park VA AAA Stable
Pennichuck Water Works, Inc. NH A Stable
Cash Special Utility District TX A Stable
Garden City GA A+ Stable
Sammamish Plateau Water WA AAA Stable
DeKalb County Public Water Supply District No. 1 MO A Stable
Irvine Ranch Water District CA AAA Stable
Boston Water & Sewer Commission MA AAA Stable
Dunedin FL AA Stable
Monona WI A+ Stable
Jurupa Community Services District CA AA+ Stable
Kentucky Bond Corporation KY AA- Stable
Orange County Sanitation District CA AAA Stable
Cleveland OH AA+ Stable
New Albany IN A+ Stable
Lake Cities Municipal Utility Authority TX AA- Stable

This report does not constitute a rating action.

Primary Credit Analyst:Mallie Lange, Austin +1 2147655861;
Mallie.Lange@spglobal.com
Secondary Contact:Jenny Poree, San Francisco + 1 (415) 371 5044;
jenny.poree@spglobal.com
Research Assistant:Dainik Sanghvi, Pune

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.

 

Create a free account to unlock the article.

Gain access to exclusive research, events and more.

Already have an account?    Sign in