...Rating through the Capital Cycle: Water and sewer utilities, particularly large urban systems, continue to contend with costly regulatory driven consent orders resulting in significant increases in capital improvement programs and related debt levels. The purpose of this report is to demonstrate the impact outsized regulatory-driven construction cycles have had on credit quality and examine the related credit considerations used in Fitch Ratings' analysis. The report highlights several large utilities rated by Fitch that are currently operating in various stages of regulatory driven capital cycles. Credit Quality Generally Maintained: Most, but not all, water and sewer utility ratings have been maintained for systems entering into and/or operating through intense construction cycles. The collection of utilities exhibited in this report have generally demonstrated sound overall credit fundamentals supportive of rating stability despite large, regulatory-driven capital programs being executed/pursued....
