Corpus Christi’s rankings beneath Moody’s evaluate for attainable downgrade

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Moody’s Scores put Corpus Christi’s bond rankings beneath evaluate for potential downgrades within the wake of the town’s motion final week ending plans for a seawater desalination plant.

The ranking company stated the evaluate introduced late Wednesday was triggered by “surprising acceleration of water depletion danger” on account of “the current cancellation of a long-term effort to reinforce (the town’s) water provide with out an satisfactory alternative,” which launched credit score high quality uncertainty. It additionally pointed to ongoing drought situations alongside the Texas gulf coast and important demand from new and current water-intensive industries.

The Corpus Christi Metropolis Council on Sept. 3 rejected a contract to proceed design work for the Interior Harbor Water Remedy Campus, which might be the first seawater desalination plant for municipal use in Texas, successfully terminating the venture as its estimated value escalated to $1.2 billion.

Moody’s, which charges Corpus Christi’s common obligation and gross sales tax income bonds Aa2 and its utility income bonds Aa3, stated the town has about $2.1 billion of excellent debt.

“The town’s water stress negatively impacts its environmental, social, and governance dangers, that are drivers of this motion,” the ranking company stated, including the evaluate will cowl Corpus Christi’s capability to safe enough water in “the doubtless occasion” its western provide dries up.

A water provide dashboard on the town’s web site signifies two western reservoirs might be depleted in the course of the first half of 2027.

“We may even consider the long-term implications of the town’s water provide vulnerabilities, together with potential impacts upon its financial, monetary, and leverage profiles,” Moody’s stated.

A press release from Corpus Christi stated sustaining the fiscal well being of its utility system is a high precedence and that it “stays dedicated to transparency, sound monetary administration, and proactive planning.”

“We’ll work carefully with our monetary advisor and finance crew to make sure we’re totally ready for this essential dialogue with Moody’s,” the assertion added.

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

Ditching the desalination plant raised issues about bonds bought for the venture by the triple-A-rated Texas Water Growth Board (TWDB) beneath low-interest mortgage agreements with Corpus Christi. 

The town is obligated to pay again an excellent principal stability of $235 million, plus $135.8 million in curiosity, in accordance with the TWDB. 

Metropolis officers have raised the opportunity of defeasing the bonds at their 10-year name dates. It was unclear how unspent bond proceeds may very well be tapped in a well timed method for tasks aside from desalination.