Corpus Christi Utility System Receives Credit Rating Downgrade

City of Corpus Christi

CORPUS CHRISTI, TEXAS (News Release) - The S&P Ratings lowered the City’s Utility System credit rating from an “AA-” to an “A.” S&P Ratings stated that the lowering of the City’s Utility System credit rating from an “AA-” to an “A” is the result of the current, acute drought risk as well as the potential for a Level 1 Water Emergency later this year.

Additionally, the downgrade is attributed to the necessity of securing additional water supply resources in the immediate term and to keep up with costs and debt service coverage ratios. The “A” rating is considered a medium grade credit rating. Additionally,

S&P Ratings has placed a “negative credit watch” on the City’s Utility System. S&P Ratings stated that as part of the “negative credit watch,” they will monitor several factors over the next three to six months, to include the City’s overall financial performance, the timely completion of water supply projects, the ability to raise utility rates, and the continued possibility of a Level 1 Water Emergency.

S&P Ratings stated that there is a potential for rating upgrades or further rating downgrades in the future depending on the completion of ongoing water supply projects on schedule and/or securing additional revenues to keep up with the costs associated with the on-going water supply projects. S&P Ratings also respectively lowered the credit ratings for a series of debt issuances for the Nueces River Authority (NRA) and the Lavaca Navidad River Authority (LNRA) from “AA-” to “A.” The NRA and LNRA’s series of debt issues affected by the lowered credit rating were for projects related to the production and transmission of water from Lake Texana via the Mary Rhodes Pipeline.