WSSC Water Maintains AAA Bond Rating on $329 Million Bond Sale

Laurel, Md. – February 1, 2024 – WSSC Water received AAA bond ratings from all three financial rating agencies – Fitch Ratings, Standard & Poor’s Global (S&P) and Moody’s Investor Service on an upcoming February 8 sale of $299.3 million in consolidated public improvement general obligation (GO) bonds. The bond sale includes an additional $30 million in green bonds. This marks the 23rd consecutive year WSSC Water has achieved a AAA bond rating.  

In Fitch Ratings overview, the firm noted, “The ‘AAA’ bond rating considers [WSSC Water’s] very strong utility fundamentals reflected in its revenue defensibility and operating risk profiles…” The rating firm went on to recognize WSSC Water’s strong financial performance. “The [utility’s] financial performance improved in fiscal 2022 (FYE June 30) and continued into fiscal 2023 with leverage of 8.9x and 8.1x, respectively.” 

Fitch Ratings also upgraded the utility’s outlook from negative to stable. WSSC Water was placed on a Negative Outlook by Fitch Ratings in September 2021 due to debt leverage exceeding 10.0x for Fiscal Year-end 2020. A Negative Outlook means there may be cause for a credit rating downgrade in the near future. In its recent report outlining their upgrade to a Stable Outlook, Fitch Ratings noted, “Fitch expects continued financial profile improvements leading to a trend of declining leverage, supporting the revision to a Stable Outlook.” 

“The AAA bond rating and upgrade to a Stable Outlook reflect leadership’s ability to make sound decisions to strengthen our fiscal position,” said Commission Chair Regina Y. Speed-Bost. “Securing the highest bond rating is a win for the agency and our customers.” 

In assigning a AAA bond rating, Moody’s Investors Services noted, “[WSSC Water] reported a healthy operating surplus in fiscal 2023, due primarily to improved revenue performance and cost-control efforts.” 

Retaining the AAA bond rating allows WSSC Water to borrow at lower interest rates, lowering debt service costs. This ultimately helps save money while funding projects that enhance the reliability and resilience of critical infrastructure. The AAA bond rating also serves as an affirmation of WSSC Water’s existing GO bonds. 

“Retaining this premier rating and securing a Stable Outlook are a testament to the hard work of our dedicated staff,” said WSSC Water General Manager and CEO Kishia L. Powell. “We carefully evaluated all options to improve our fiscal position in response to Fitch’s Negative Outlook. We took immediate steps to increase collections and slow expenditure growth. This is great news, and we will continue looking for ways to reduce costs, implement innovative solutions and diversify revenues to take the pressure off customer rates.” 

Proceeds from the general obligation bonds will fund key capital projects, including:  

• $25.2 million for the Anacostia Maintenance Depot Reconfiguration;   
• $24.9 million for Prince George’s County South Potomac Supply Improvement, Phase 2;   
• $22.1 million for the Water Reconstruction Program; and 
• $13.5 million Water Storage Facility Rehabilitation Program. 

Proceeds from the sale of $30 million in green bonds will fund the following upgrades:  

• Potomac Water Filtration Plant: $20 million  
• Large-diameter water distribution system: $10 million 

WSSC Water’s Green Financing Framework was assigned a Sustainability Quality Score 2 (very good) from Moody’s Investor Services. The Framework establishes WSSC Water’s process for financing projects across eligible green categories. The framework is aligned with the four core components of the International Capital Market Association's (ICMA) Green Bond Principles. 

Moody’s did identify WSSC Water as a “best practice” for the management of bond proceeds by having a clear and defined management process, as well as the management and use of unallocated proceeds.  

To learn more about WSSC Water’s financial information, visit wsscwater.com/fin. For more information on the utility’s green bonds, visit wsscwater.com/greenbonds.