Water woes sink Corpus Christi’s bond scores

Bloomberg Information

Moody’s Scores downgraded Corpus Christi’s bond scores on Thursday, citing a looming water provide disaster and a decent timeframe to go it off.

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The Texas metropolis’s normal obligation and gross sales tax income bond scores had been dropped to A1 from Aa2 and its mixed utility enterprise bond score was minimize to A1 from Aa3. The lowered scores had been assigned unfavourable outlooks by Moody’s, which stated the town has about $2 billion in whole debt excellent.

“The downgrade displays elevated credit score dangers to the town’s financial, monetary, and leverage profiles related to the surprising acceleration of water depletion danger and the slim window to implement options earlier than November 2026, which may set off a Degree 1 Emergency, indicating 180 days till its water provide will likely be inadequate to fulfill demand,” Moody’s stated in a press release.

The downgrades adopted a assessment the score company launched in September after the Corpus Christi Metropolis Council halted plans for an Interior Harbor Water Therapy Campus venture, which might be the first seawater desalination plant for municipal use in Texas.

The town didn’t instantly reply to a request for touch upon the downgrades.

In October, Fitch Scores and S&P World Scores revised their outlooks on Corpus Christi’s utility system income bonds to unfavourable from secure, signaling issues over the town’s capacity to spice up its water provide. 

The town council took an preliminary step final month to revive the desalination venture it cancelled because the estimated price ticket climbed to practically $1.2 billion by approving a memorandum of understanding with a brand new design-build crew, which is tasked with producing proposals early subsequent 12 months for free of charge to the town.

Different latest motion taken by the council to spice up water provides, contains agreements to acquire groundwater and to safe 50 million gallons of water day by day from the Nueces River Authority’s proposed seawater desalination plant, in addition to an $11 million deal to design a significant growth of the town’s reclaimed water infrastructure. Final week, the town introduced a residential water price enhance.

Moody’s acknowledged Corpus Christi’s efforts, whereas noting “the town has little margin for delay.”

“The magnitude of water stress makes curtailment of business operations — a key driver of the regional financial system and depending on the town’s water provide — extra possible,” the score company stated. “Failure to efficiently implement options may exert vital financial and monetary pressure and appreciable downward stress to the town’s credit score profile.”

Corpus Christi Water, which is the first water provider for a seven-county area, anticipated the seawater desalination plant to supply as much as 36 million gallons of potable water day by day. The world is experiencing stage three drought situations that triggered water-use restrictions. 

A water provide dashboard on the town’s web site signifies two western reservoirs will likely be depleted throughout the first half of 2027.