Standard & Poor's (S&P) has issued its first quarterly report on public power and rural electric cooperatives: Muni Utility Ratings: 1995, 1996, and Beyond. The report predicts that the shakeout in credit quality that has characterized the municipal utility industry since 1993 will continue in 1996. Downgrades and negative outlook assignments will continue to outpace positive ratings actions, but not at the 1995 rate. Longer-term credit trends are less certain and largely will depend on the degree and pace of change as utilities respond to customers and state and federal mandates to increase competition. Issuers with high costs, uncompetitive rates, and recalcitrant management could see their ratings slip.
S&P notes that 1995 "was not kind to public utility systems in terms of credit quality": Nine public power issuers (em including some of the nation's best-known and largest utilities (em were downgraded, affecting over $23 billion in debt. In 1996, S&P expects that most of the nearly 200 systems it rates will experience credit stability. t
Lori A. Burkhart is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.
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