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Fitch 2013 public power peer study notes downward trend on debt service coverage, but strong liquidity in sector

From the June 18, 2013 issue of Public Power Daily

Originally published June 18, 2013

By Robert Varela
Editorial Director
Fitch Ratings released the 2013 version of its U.S. Public Power Peer Study on June 14, offering a point-in-time assessment of Fitch-rated wholesale and retail public power utilities and rural electric cooperatives. Fitch also released its latest version of its "Peer Study Addendum," an interactive Excel based analytical tool for comparing a utility's key financial metrics to median calculations on a notch-specific rating basis for comparable entities rated within the same rating category (i.e. 'AA', 'A', 'BBB') and against the entire portfolio of Fitch-rated issuers.

Key findings of the 2013 peer study include:

    • Debt service coverage for wholesale systems continued its downward trend, while coverage for ‘AA’ and ‘A’ retail systems diverged, broadly reflecting weaker margins for most systems.
    • Cash-on-hand medians generally increased for wholesale and retail systems, affirming strong liquidity throughout the sector.
    • The ratio of capital expenditures to depreciation generally continued to decline for most systems. This trend, together with increased cash on hand, likely remains attributable to slower growth and the deferral of certain capital expenditures.
    • Leverage metrics remained relatively unchanged for both retail and wholesale systems, with leverage medians for A-rated systems remaining higher than AA systems.

This year's edition of the addendum has a new feature, the "Public Power Dashboard," which provides a system overview that includes key rating, operational, and financial information for each of the public power and cooperative issuers included in the peer study, and the ability to compare trends in operational and financial data between two systems, and financial metrics against rating category medians.


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Senior Vice President, Publishing 
Jeanne Wickline LaBella

Editorial Director
Robert Varela

Editor, Public Power Daily
Jeannine Anderson

Communications Assistant
Fallon W. Forbush

Manager, Integrated Media 
David L. Blaylock

Integrated Media Editor 
Laura D’Alessandro