Fitch Ratings Lowers Credit Rating for Corpus Christi’s Utility System Due to Drought and Water Emergency
Corpus Christi, TX - The City met with Fitch Ratings on Thursday, May 21, on the City’s utility debt rating. The meeting was an off-cycle meeting for Fitch to get updates on the City’s water supply situation and drought management.
Today, Fitch Ratings notified the City of Corpus Christi that the City’s Utility System credit rating will be lowered from an “AA-” to an “A-,” from a high grade to an upper medium grade.
Fitch Ratings stated that the downgrade is the result of the “system's weakened revenue defensibility and the continued strain on its financial profile due to acute water supply constraints.”
Fitch Ratings noted that uncertainty related to potential water curtailments and their impact on revenue generation, critical supply projects, and capital spending requirements, along with industrial customer concentration, could limit the system's ability to meaningfully improve leverage and coverage metrics.
An upgrade is unlikely in the near term but may be possible in the future. Fitch Ratings stated that the City could stabilize its outlook by timely executing numerous water supply captial projects to secure additional water supply.
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