S&P, Fitch Upgrade City’s Water and Wastewater Credit Rating to AA, Affirm City’s Credit Rating of AA+
On January 30, 2023, the City of Lubbock, led by Mayor Tray Payne, City Manager Jarrett Atkinson, and Chief Financial Officer Blu Kostelich, underwent credit rating agency reviews with Standard & Poor’s Global Ratings (S&P) and Fitch Ratings (Fitch) in advance of the City’s upcoming General Obligation Bond and Water/Wastewater Revenue Bond debt issuances. S&P and Fitch grade the City and the City’s Water and Wastewater Utility System on several factors, including Lubbock’s overall economy, the City’s management team and practices, the City’s financial measures such as liquidity, annual budget operating performance, and budgetary flexibility, and Lubbock’s existing debt and long-term liabilities.
Both S&P and Fitch affirmed the City’s General Government rating of ‘AA+’ with stable outlooks. This rating is the second highest possible rating given out by the two agencies. S&P noted specifically, the City’s strong economy, very strong management and financial-management practices, and strong budgetary performance as their justification for the very strong rating. Fitch highlighted the City’s “high level of demonstrated and anticipated operating financial resilience” as the driver for their rating assignment.
For the Water and Wastewater Utility System, S&P upgraded the system’s long-term rating from a ‘AA-’ to a ‘AA’ with a stable outlook. S&P stated the justification for the upgrade as a “reflection of the strong conservative forward-looking management that ensures financial metrics will be maintained at current levels, if not improved, over time.” Fitch maintained the system’s ‘AA’ credit rating but assigned an upgraded ‘positive outlook.’ In their report, Fitch stated the reason for the positive outlook upgrade “reflects the system’s improved leverage position as the system comes out of a capital-intensive spending cycle largely funded by debt that concluded in 2018,” and “lower capex and rapid debt amortization have contributed to a decline in leverage that is expected to stabilize at levels consistent with ‘AA+’ rating.”
“I am pleased to see that both Fitch and Standard & Poor’s have upgraded our ratings,” said Mayor Tray Payne. “These upgrades are further evidence of Lubbock’s strong economy, positive economic outlook and the City’s sound fiscal practices.”
All final rating reports for the City of Lubbock’s General Government credit and the Water and Wastewater Utility System will be available on each agency’s website listed below once finalized and published.
Standard & Poor’s: spglobal.com/en/
Fitch Ratings: fitchratings.com/
