Dec 05 - Despite concerns about current economic, capital, and political pressures, Fitch Ratings' outlook for the municipal water and sewer sector is stable, according to a report issued today.
The sector remains strong overall, rating downgrades have abated, and downgrades now approximate upgrades as most issuers have responded to a weaker sales environment and taken measures to enhance financial results.
'Most systems continue to exhibit more than sufficient financial flexibility,' said Doug Scott, Managing Director at Fitch. 'Indeed, Fitch's latest medians even point to some improvement in key financial metrics on a year-over-year basis.'
Despite the intensive capital nature of the sector, leverage ratios remain manageable and are not expected to increase significantly in 2013 with key debt ratios expected to rise 3% to 5% as utilities focus efforts on asset maintenance.
Reliance on water and sewer utility revenues to support strained local government budgets could erode sector financial results. Municipal defaults or bankruptcy filings that challenge bondholder payments could undermine the sector's fundamentals by calling into question the willingness to pay, particularly for utilities that are a component unit of a local government. However, these are expected to be isolated issues in 2013
Fitch will host a teleconference on Friday, Dec. 7th at 2pm EST to discuss highlights of both its 2013 water & sewer outlook and medians reports.
Dial-in details are:
Date: Friday Dec. 7, 2012
Time: 2:00pm EST
U.S. Participants: +1-877-467-8597
International Participants: +1-706-643-6296
Conference and Replay ID: 73932486
Replays will be available for 30 days. Replay dial-ins are accessible using the following numbers:
U.S. Replay: +1-855-859-2056
International Replay: +1-404-537-3406