Overview
S&P Global Ratings took 48 rating actions, revised 22 outlooks, and took four CreditWatch actions within the U.S. municipal water and sewer utilities sector in third-quarter 2024. One hundred and three ratings were maintained with no outlook revisions. Two were removed from CreditWatch, and two were placed on CreditWatch with negative implications.
Negative rating actions exceeded positive actions by two to one. Unfavorable outlook revisions exceeded favorable revisions by thirteen to eight. Bond issuance increased relative to second-quarter 2024 and is stronger compared to the same quarter in 2023.
Table 1
U.S. Municipal Water & Sewer Utilities Rating Actions, Year-To-Date 2024 | |||
---|---|---|---|
First Quarter | Second Quarter | Third Quarter | |
New rating (new sale with new rating, outlook revision, or rating revision) | 17 | 9 | 15 |
Upgrade | 8 | 9 | 11 |
Downgrade | 11 | 34 | 22 |
Favourable outlook revision | 7 | 11 | 8 |
Unfavourable outlook revision | 5 | 13 | 13 |
Removed from CreditWatch | 1 | 45 | 5 |
CreditWatch with negative implications | 73 | 2 | 2 |
Maintained ratings with no outlook revision | 72 | 112 | 103 |
CreditWatch developing | 1 | 0 | 1 |
Third Quarter Rating Actions
Negative rating actions were primarily driven by deteriorating financial metrics and elevated operational risks, consistent with our negative outlook on the sector, which reflects rising cost pressures. Positive rating actions were driven by strengthening financial metrics in addition to progression on capital improvement plans that resulted in strong operational management.
Third Quarter Outlook Revisions And CreditWatch Actions
Negative outlook revisions reflected our projected deterioration in financial metrics and well as our uncertainty regarding rate-setting practices. Positive outlook revisions reflected improvement in financial performance, typically supported by healthy rate-setting to offset rising operating expenses.
Third Quarter Lookback
The midyear sector outlook was revised to negative as we expect operating and financial pressure to continue into 2025. We expect the complex regulatory environment and continued climate volatility to pressure credit quality as management teams navigate these challenges. Rising energy and chemical costs also continue to strain operating margins and we believe affordability will begin to diminish for some credits given economic conditions. Smaller systems have been more vulnerable to credit deterioration given lower nominal liquidity, less access to the benefits of economies of scale, and greater event risk given more limited managerial policies, practices, and expertise. For more information, see "U.S. Public Finance 2024 Midyear Outlook: A Cooldown Ahead," published July 15, 2024.
In August, we published our view of the Loper decision's potential credit implications. We believe the decision will likely influence the regulatory and policy landscape for U.S. public finance issuers with respect to the timing and scope of regulatory actions. For more information, see "What The Loper Decision May Mean For U.S. Public Finance," published Aug. 14, 2024.
The following tables summarize S&P Global Ratings' third-quarter 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 Third Quarter 2024 | |||||||
---|---|---|---|---|---|---|---|
Entity | State | Rating to | Rating from | Outlook to | Outlook from | CreditWatch | Reason for rating change |
Brandon | SD | A+ | Stable | New rating. | |||
Newark | OH | A- | A- | Stable | Negative | Outlook revision reflects improved financial performance and planned rate increases. | |
Oceanside | CA | AAA | AA+ | Stable | Stable | Upgrade reflects our view of improved financial performance. | |
Gypsum | CO | A | Stable | New rating. | |||
Mebane | NC | AA- | Stable | New rating. | |||
Corcoran | CA | A- | A | Stable | Negative | Downgrade reflects rising cost pressures leading to the decline of debt service coverage along with physical risks related to groundwater scarcity in the service area and the potential costs of mitigating these risks, which could adversely affect ratepayer affordability. | |
Ocoee Utility District of Bradley and Polk Counties | TN | A+ | A+ | Negative | Stable | Outlook revision reflects volatility in financial performance. | |
Marina Coast Water District | CA | AA- | AA- | Positive | Stable | Outlook revision reflects our view of improvement in financial metrics. | |
Knoxville Utilities Board | TN | AAA | AA+ | Stable | Positive | Upgrade reflects completion of a 20-year consent decree, strong management practices, and consistently improving financial risk profile. | |
Economy Borough Municipal Authority | PA | A | A+ | Stable | Stable | Downgrade reflects declines in debt service coverage and limited rate-setting flexibility. | |
Rockaway Valley Regional Sewage Authority | NJ | A+ | Stable | New rating. | |||
The Utilities Board of the Town of Odenville | AL | A | A | Positive | Stable | Outlook reflects our view of improvements in financial metrics. | |
Esparto Community Services District Water | CA | A | A+ | Stable | Stable | Downgrade reflects thin liquidity and volatility within financial profile. | |
Town of Johnstown | CO | AA- | Stable | New rating. | |||
Laguna Beach County Water District Public Financing Authority | CA | AA | Stable | New rating. | |||
Cleveland | OH | AA- | Stable | New rating. | |||
South Davis Sewer District | UT | BBB+ | BBB+ | Developing | Not meaningful | Outlook reflects that we could raise or lower the rating depending on negotiations for the transfer of ownership. | |
Egg Harbor Township Municipal Utilities Authority | NJ | A+ | AA- | Stable | Stable | Downgrade reflects our view of thin liquidity. | |
Portland Water District | ME | AA+ | AA | Stable | Stable | Upgrade reflects our view of the consistently strong financial performance coupled with the strong water supply. | |
Cumberland Mountain Water & Fire Protection Authority | AL | BBB+ | A- | Negative | Not meaningful | Downgrade and outlook revision reflect our view of the weak service area economy, volatile coverage, and limited liquidity reserves. | |
Bend | OR | AA+ | AA | Stable | Stable | Upgrade reflects strengthening financial metrics. | |
Mishawaka | IN | AA- | AA- | Negative | Stable | Outlook revision reflects declining debt service coverage and uncertainty surrounding future rate increases to support financial performance. | |
Polk County Water, Sewage And Solid Waste Authority | GA | A | A | Positive | Stable | Outlook reflects our view of the authority's improved financial metrics. | |
Ukiah | CA | A | A+ | Negative | Stable | Downgrade and outlook revision reflect weakening financial metrics due to rising operating expenses. | |
Trinity River Authority | TX | AA- | AA- | Negative | Stable | Outlook revision reflects potential for rate affordability pressures within major member cities due to rising costs, and weakness within financials at the largest contract participants. | |
Trinity Bay Conservation District | TX | A | A | Not meaningful | Stable | Negative | CreditWatch reflects lack of sufficient information. |
Town of North Liberty | IN | A- | A | Stable | Stable | Downgrade reflects increase in operational costs that have pushed financial margins to narrow levels, with increased capital spending and rising fixed costs. | |
Brentwood Infrastructure Financing Authority | CA | AA+ | AA | Stable | Stable | Upgrade reflects our expectation for consistently strong financial metrics, the lack of additional debt plans, and resilient water supply. | |
Center Township Water Authority | PA | A | A+ | Negative | Stable | Downgrade reflects weakening debt service coverage. | |
Niwot Sanitation District | CO | A+ | Stable | New rating. | |||
Portage | IN | BBB | BBB- | Stable | Positive | Upgrade reflects improving financial metrics. | |
Bennett Town | CO | A | A- | Stable | Stable | Upgrade reflects strengthened financial metrics. | |
Laredo | TX | AA- | AA- | NM | Negative | Negative | CreditWatch reflects our view that there could be downward rating pressure depending on the upcoming rate plans and layering of additional debt. |
Port Angeles | WA | A- | A | Negative | Stable | Downgrade and outlook reflect our view of the delayed cost recovery to offset elevated cost pressures, resulting in weakened financial metrics. | |
Fairview | UT | BBB- | BBB- | Negative | NM | Outlook reflects our uncertainty regarding management's ability to build available reserves. | |
Murray City | UT | AA | AA- | Stable | Stable | Upgrade reflects consistently stronger debt service coverage metrics. | |
North Bend | WA | AA- | AA- | Stable | Not meaningful | Rating reflects receipt of timely audited financials. | |
Metropolitan Sewer Subdistrict | SC | AA | Stable | New rating. | |||
Northeast Ohio Regional Sewer District | OH | AA+ | AA+ | Positive | Stable | Outlook reflects our view of the district's ability to continue executing on its large consent order program while meeting or exceeding planned financial targets. | |
Town of Prosper | TX | AA- | Stable | New rating. | |||
Fond du Lac Sewer | WI | A+ | Stable | New rating. | |||
Stevenson Utilities Board | AL | BBB- | BBB- | Negative | Stable | Outlook reflects our view of the decline in debt service coverage in recent fiscal years and uncertainty surrounding the longer-term financial profile and rate-making flexibility. | |
Medford | OR | A+ | Stable | New rating. | |||
Public Utilities Commission of the City & County of San Francisco | CA | AA | AA | Negative | Stable | Outlook reflects the size and scope of upcoming debt plans and management's 10-year financial forecast. | |
Fairview | UT | BBB- | BBB | Not meaningful | Stable | Negative | Downgrade reflects declining liquidity. CreditWatch reflects management not providing timely information surrounding updates and expectations for future financial performance. |
Rayburn Country Munical Utility District | TX | BBB | BBB+ | Not meaningful | Stable | Negative | Declining liquidity and weak disclosure, combined with rate covenant violation. |
El Paso De Robles | CA | AA- | AA- | Stable | Negative | Outlook revision reflects stabilized financial profile following the implementation of rate increases. | |
Port of Morrow | OR | BBB | A- | Stable | Stable | Downgrade reflects the large upcoming capital improvement plan, including additional debt. | |
Grass Valley | CA | A+ | AA- | Stable | Stable | Downgrade reflects economic metrics and cash levels supportive of a lower rating level. | |
Jonah Water Special Utility District | TX | A+ | A+ | Positive | Stable | Outlook reflects the service area's strong continued growth, which has supported consistently strong operating margins. | |
Dallas County Park Cities Municipal Utility District | TX | AA+ | AA | Stable | Stable | Upgrade reflects strong credit profiles of the district's current participants. | |
Marin County Sanitary District No. 2 | CA | AA- | Stable | New rating. | |||
Memphis | TN | AA+ | AA+ | Negative | Stable | Outlook reflects our view of upcoming capital spending plans, which could pressure near-term financial metrics. | |
St. Paul | MN | AAA | AAA | Negative | Stable | Outlook reflects our expectation for financial metrics to weaken. | |
Pine Bluff Water Authority | AL | A | A | Negative | Stable | Outlook reflects declines in the financial profile and limited rate-setting flexibility. | |
Sandy | OR | AA- | Stable | New rating. | |||
Kane County Water Conservancy District | UT | BBB- | A- | Negative | Stable | Outlook reflects our view of the district's weakened cash levels and thin operating margins along with uncertainty about future actions regarding rate-setting and how reliance on tap-in fees will continue. | |
Guntersville Waterworks and Sewer Board | AL | A | A+ | Stable | Negative | Downgrade reflects thin liquditiy coupled with increasing concentration risks. | |
Carroll-Boone Water District | AR | A- | A- | Negative | Stable | Outlook reflects weaknesses in the financial performance of the lead municipal customer. | |
Chandler Town | IN | A | A+ | Stable | Stable | Downgrade reflects declining liquidity position. | |
Winslow | AZ | BB+ | A | Negative | Stable | Downgrade and outlook revision reflect insufficient debt service coverage and declines in liquidity. | |
Kalamazoo | MI | AA- | AA- | Stable | Negative | Outlook revision reflects our view of the utility's debt service coverage outperforming expectations and strengthening liquidity. | |
Memphis Light, Gas, and Water Division | TN | AAA | AAA | Negative | Stable | Outlook revision reflects our view of upcoming capital spending plans, which could pressure near-term financial metrics. | |
Tacoma | WA | AA+ | AA | Stable | Stable | Ugrade reflects conservative financial policies and long-term planning practices that have led to consistent exceptionally strong financial metrics. | |
Kearney | NE | A- | Stable | New rating. | |||
Ashville | AL | BBB+ | A | Negative | Stable | Downgrade and outlook revision reflect thin operating margins and uncertainty surrounding future financial performance. | |
Woonsocket Water | RI | A- | A | Not meaningful | Stable | Negative | Downgrade reflects lower liquidity, along with weaker debt service coverage metrics. CreditWatch reflects uncertainty surrounding proposed rate increases. |
Fairburn | GA | A- | A | Negative | Negative | Downgrade and outlook revision reflect weak debt service coverage and uncertainty surrounding whether the adopted rate increases will stabilize debt service coverage at a stronger level. | |
Ontario | CA | AA+ | AA | Stable | Stable | Upgrade reflects our view of extraordinary financial strength along with effective rate-setting practices. | |
Sarasota County | FL | AA+ | Stable | New rating. | |||
Esparto Community Services District Sewer | CA | A | A+ | Stable | Stable | Downgrade reflects thin liquidity coupled with volatility within financial metrics. | |
Warsaw | IN | A+ | AA- | Stable | Stable | Downgrade reflects volatility in debt service coverage and declines in liquidity. | |
Asotin County Public Utility District #1 | WA | A+ | Stable | New rating. |
Table 3
U.S. Municipal Water And Sewer Utilities Maintained Ratings, Summary Third Quarter 2024 | |||
---|---|---|---|
Entity | State | Rating | Outlook |
Ephrata Borough Authority | PA | A- | Stable |
Kentucky Association of Counties Finance Corporation | KY | AA- | Stable |
Orlando | FL | AAA | Stable |
Kalamazoo | MI | AA- | Stable |
Ohio Water Development Authority | OH | AAA | Stable |
Indiana Finance Authority | IN | AAA | Stable |
Trinity River Authority | TX | AA+ | Stable |
Charleston | SC | AAA | Stable |
Rural Water Financing Agency | KY | AA- | Stable |
Fond du Lac Water | WI | A | Negative |
Spartanburg County | SC | AA | Stable |
Woonsocket Sewer | RI | A+ | Stable |
Redwood City | CA | AA | Stable |
Benton Washington Regional Public Water Authority | AR | A+ | Stable |
Johnston County | NC | AA+ | Stable |
Tampa | FL | AAA | Stable |
Lewisville | TX | AAA | Stable |
New York City Municipal Water Finance Authority | NY | AAA | Stable |
Tampa Bay Water | FL | AA+ | Stable |
Valley Sanitary District | CA | AA+ | Stable |
Weber Basin Water Conservancy District | UT | AA+ | Stable |
Kentucky Bond Corporation | KY | AA- | Stable |
Honolulu City and County | HI | AA+ | Stable |
Loudon | TN | A+ | Stable |
Oregon Bond Bank | OR | AA+ | Stable |
Polk County | FL | AA+ | Stable |
Charlotte | NC | AAA | Stable |
Denver Board of Water Commissioners | CO | AAA | Stable |
Illinois Finance Authority | IL | AAA | Stable |
Portage | WI | A | Stable |
Exeter | CA | A | Stable |
Macon Water Authority | GA | AA | Stable |
Allegheny County Sanitary Authority | PA | AA- | Stable |
Westmoreland County Municipal Authority | PA | A+ | Stable |
Timpanogos Special Service District | UT | AA | Stable |
Burgettstown-Smith Township Joint Sewerage Authority | PA | A | Stable |
Harpeth Valley Utilities District | TN | AA+ | Stable |
Mesquite | TX | AA | Stable |
North Dakota Public Finance Authority | ND | AAA | Stable |
Palm Coast | FL | AA- | Stable |
Snoqualmie | WA | AA | Stable |
North TX Municipal Water District | TX | AAA | Stable |
Pasco County | FL | AA+ | Stable |
Fredericksburg | TX | AA- | Stable |
Tangipahoa Parish Sewerage District #1 | LA | A- | Stable |
Camarillo Sanitary District | CA | AA+ | Stable |
Huntsville | AL | AAA | Stable |
East Baton Rouge Sewerage Commission | LA | AA- | Stable |
Suburban Lancaster Sewer Authority | PA | A | Stable |
Louisville and Jefferson County Metropolitan Sewer District | KY | AA | Stable |
Cobb County Marietta Water Authority | GA | AAA | Stable |
Tangipahoa Parish Water District | LA | A | Stable |
Mesa Water District | CA | AAA | Stable |
Knoxville Utilities Board | TN | AAA | Stable |
Payson City | UT | A+ | Stable |
San Diego | CA | AA+ | Stable |
Indianapolis | IN | AAA | Stable |
The Metropolitan District Hartford County | CT | AA | Stable |
South Dakota Conservancy District | SD | AAA | Stable |
Texas Water Development Board | TX | AAA | Stable |
San Antonio | TX | AA+ | Stable |
Watauga River Regional Water Authority | TN | A | Stable |
Edmond Public Works Authority | OK | AA- | Stable |
Del Puerto Water District | CA | BBB+ | Stable |
Cincinnati | OH | AAA | Stable |
Arizona Water Infrastructure Finance Authority | AZ | AAA | Stable |
Vermont Bond Bank | VT | AA+ | Stable |
Upper Occoquan Sewage Authority | VA | AAA | Stable |
Maine Municipal Bond Bank | ME | AA+ | Stable |
Metro Water Reclamation District of Greater Chicago | IL | AA+ | Stable |
La Porte | IN | A- | Stable |
Oklahoma Water Resources Board | OK | AAA | Stable |
Stockton | CA | A | Stable |
Onslow Water & Sewer Authority | NC | AA- | Stable |
New York State Environmental Facilities Corporation | NY | AAA | Stable |
Cleveland | OH | AA+ | Stable |
Dorchester County | SC | AA | Stable |
South Bullock County Water Authority | AL | A- | Stable |
Gainesville | GA | AA | Stable |
City of Westminster | CO | AAA | Stable |
Pima County | AZ | AA | Stable |
Virginia Resources Authority | VA | AAA | Stable |
New Mexico Finance Authority | NM | AAA | Stable |
Pleasant Grove | UT | A+ | Stable |
Upper Trinity Regional Water District | TX | A+ | Stable |
Sherman | TX | A | Negative |
Tempe | AZ | AA- | Stable |
Asheville | NC | AA+ | Stable |
Peace River Manasota Regional Water Supply Authority | FL | 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: | Uttara G Kulkarni, Pune |
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