Fitch Ratings-New York-15 June 2018: U.S. public power utilities are generally seeing a continuation of strong financial trends, with the exception of weaker debt service coverage, according to Fitch Ratings’ 2018 U.S. Public Power Peer Review.
“While the latest peer review shows that lower ratios of capital investment to depreciation, as well as the retention and redeployment of excess cash flow, are improving utility balance sheets, coverage medians broadly weakened in 2017,” says Dennis Pidherny, Managing Director, U.S. Public Finance. The weaker coverage metrics were reported against a backdrop of rising fuel costs and interest rates.
Trends highlighted in the 2018 peer review include:
–Debt service coverage weakened for wholesale and retail systems across nearly all rating categories, reversing an earlier trend.
–The capex-to-depreciation trend continued downward for wholesale systems, with the median for ‘A’ rated systems falling below 100% for the second year in a row. Median’s for retail systems were mixed, but remained at levels lower than observed earlier this decade.
–Cash on hand medians for ‘A’ rated retail and wholesale systems continued to improve and are at the highest levels observed this decade. Although medians for ‘AA’ rated retail systems declined again, the level is well above historical medians. This trend and the lower capital investment rates likely reflect slower demand growth and the continued deferral of certain capex.
–Leverage metrics remained remarkably stable for both retail and wholesale systems across rating categories.
Fitch’s U.S. Public Power Peer Review is a point-in-time assessment of Fitch-rated public power utilities. It assists market participants in making their own comparisons among the recent financial performance of wholesale and retail public power systems, and rural electric cooperatives. It is accompanied by the 2018 Fitch Analytical Comparative Tool (FACT) for Public Power, an interactive tool that provides enhanced trend analysis and peer comparison tables.
The full report, “2018 U.S. Public Power Peer Review,” is available at www.fitchratings.com.
Contact:
Dennis Pidherny
Managing Director
+1-212-908-0738
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: [email protected]
Additional information is available on www.fitchratings.com