Credit Agencies Affirm Water Authority’s Strong Ratings Despite Headwinds
All three major rating agencies – S&P, Moody’s, and Fitch – affirmed the San Diego County Water Authority’s strong credit ratings in March 2021, helping the Water Authority optimize its debt portfolio and minimize the cost of financing important water reliability projects.
In affirming their credit ratings, the services cited the Water Authority’s strong financial leadership, including prudent strategies to manage issues related to COVID-19, its success diversifying water supply sources, its commitment to infrastructure maintenance, and its financial reserves for managing contingencies, among other factors.
- Fitch Ratings affirmed its AA+ rating and gave a stable outlook on March 15. Fitch noted the Water Authority’s "operating costs are low" and credited the Water Authority for “significant investments in supply diversification (that) have allowed SDCWA to continue to meet water demands in its service area." Fitch also accounted for the Water Authority’s hiring freeze, spending cuts and deferral of $30 million in planned capital spending to proactively manage finances during the pandemic.
- Moody’s Investors Service affirmed its Aa2 rating and stable outlook March 14. Moody’s said, "the stable outlook reflects our expectation that the Authority’s satisfactory operating performance will continue, supported by strong management practices in the face of challenges associated with variable water supplies, rising costs, and the coronavirus pandemic."
- S&P affirmed its AAA rating on March 17 and issued a negative outlook based on "heightened business risks associated with potential projected declines in water sales." On the plus side, S&P cited the Water Authority’s demonstrated ability to navigate highly variable demands and weather cycles. The agency also said, “management is taking important steps" to balance fixed and variable costs, and it praised the Water Authority’s "robust infrastructure maintenance and operational policies."
“The Water Authority maintains a solid financial position even in these difficult times, and the credit ratings reflect that. But the challenges are real as well, and they should unify the region to ensure that we continue to benefit from the safe, reliable water supplies we’ve invested in together for the past 30 years.”