The credit quality of U.S. municipal water and sewer utilities is generally strong, with almost half of the sector considered highly rated with debt ratings of ‘AA-‘ or higher. In our analysis of the group according to our criteria, S&P Global Ratings found that highly rated utilities have in common certain credit characteristics.
Broadly, the sub-group stands out for having:
- A consistent financial performance;
- Assets that already functioning at high level, or a clear plan and funding to develop their assets; and
- An overall alignment of strategic goals among management, elected officials, and customers.