Strong Financial Position, Operational Improvements and Proposed Capital Investment Recognized Ahead of Utility Revenue Bond Sale
Richmond, VA – The City of Richmond is pleased to announce that it has maintained its Public Utility Revenue Bond ratings across the Country’s three major, independent bond rating agencies. Fitch Ratings, S&P Global and Moody’s Investors Service have reaffirmed the AA, AA and Aa1 ratings, respectively, on the City’s Public Utility Revenue Bonds.
“The utility ratings reaffirm this Administration’s strong financial position and our commitment to investing responsibly in the critical infrastructure residents depend on every day,” said Mayor Danny Avula. “They also reflect sound financial management and the operational improvements needed to continue building a resilient and thriving utility system for the future.”
Chief Administrative Officer Odie Donald II said “We are very pleased that all the rating agencies reaffirmed both the general fund and utility enterprise fund ratings. It is clear that a path to get to AAA for all of our general fund ratings is attainable by continuing increases in our reserve fund levels. If we are to maintain our very strong Moody’s rating, and see S&P and Fitch raise their ratings, then the City must continue the investment and increased capabilities illuminated through our recent path of historic capital investment.”
The Utility Bond Ratings positions the City to access the capital markets at favorable interest rates as DPU advances its water, wastewater and gas system capital program, including the Combined Sewer Overflow program and ongoing system resiliency investments.
“Richmond continues to enjoy very strong credit ratings for both their general and utility enterprise funds,” said David Rose, Financial Advisor to the City. “The general fund sale results were excellent, and we expect nothing less in the coming weeks for the Utility Revenue Bonds. The City clearly has momentum, and the future is very exciting. During the rating agencies’ in-person visits just a few weeks ago, the energy, increased economic development activity and overall positive growth and excitement around town was clearly evident.”
Excerpts from each agency’s rationale, and links to their respective releases, are below.
Fitch Ratings: AA
“Richmond serves as the capital for the Commonwealth and a major hub for universities and government-sector employment. The city retains the legal authority to adjust rates as
needed without external oversight. Fitch considers the monthly residential water and sewer bill affordable for around 67% of the service area population, based on Fitch's standard monthly usage of 7,500 gallons for water and 6,000 gallons for sewer.”
S&P Global: AA
“Our rating reflects Richmond Department of Public Utilities' (DPU) strong financial position supported by sound financial and operational management practices, alongside continued progress in strengthening system resilience and operations following the backup system failure that led to the loss of water service and boil water advisories for five days in
January 2025. Since the event, management has implemented operational and capital improvements that we believe reduce the likelihood and severity of future disruptions, as evidenced by no service interruptions during the most recent winter season. Recent
operating performance and financial results indicate stability, with year-to-date fiscal 2026 performance tracking ahead of budget based on management-reported results.”
Moody’s: Aa1
“The Aa1 rating on the utility system revenue bonds reflects sound debt service coverage
despite recent declines, and liquidity that is expected to strengthen in fiscal 2026 based on year-to-date results. The rating also benefits from strong financial strategy, comprehensive policies, proactive risk management, and long-term planning. The management team is highly experienced and has a track record of budgeting conservatively to support prudent
fiscal practices…The system’s capital needs are substantial, though they will be partially offset by rate increases and strong financial planning.” The Moody's rating analyst has
indicated that this outlook can be amended in as little as 12 months based on the City's future user rate actions.
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Fitch and S&P assigned “Stable Outlooks” to their ratings. Moody’s, whose Aa1 rating remains one notch above the other two agencies, revised its outlook to “Negative,” indicating it could, in the future, revise its rating to be on par with the other two agencies.
The City has made strong commitments to infrastructure and improving the resilience of DPU’s operations through strong investments that align with management’s long-term improvement strategy. Moody’s reaffirmation of the current rating with a negative outlook acknowledges these historic capital investments, strong management and the challenges with balancing affordability and long-term capital investments required to maintain safe and reliable services.
In their respective analyses, all three agencies pointed to DPU’s strong financial position, sound management practices, demonstrable progress that has strengthened system resilience following the January 2025 event and the financial framework proposed to
support historic levels of capital reinvestment required over the next five to ten years.
“The rating agencies were clearly pleased that our department has made significant improvements in our operations, including our capital improvement plan and our responses to all recent internal and external recommendations regarding our water system following the water crisis of January 2025,” said Director of Public Utilities Scott Morris, “A testament to the work to date was the outcome of one of the most challenging winters in recent memory – the City utility systems functioned without any major service interruption. The current proposed budget to City Council includes difficult but needed adjustments to user rates and charges to support record levels of capital investment over the next five to ten years that ensure reliable services continue.”
