OREANDA-NEWS. The ability and willingness to obtain timely rate relief remains key for U.S. water and sewer utilities looking to offset the risks associated with regulatory pressure, according to Fitch Ratings.

Large urban systems, in particular, often contend with regulatory-driven construction cycles that increase capital improvement plans and drive substantial increases in related debt levels.

"Proactive management and long-range planning will continue to be essential for maintaining rating stability throughout costly capital cycles," says Christopher Hessenthaler, Senior Director in Fitch's U.S. Public Finance group.

Fitch profiled five large, urban utility systems currently operating in various stages of intense construction phases to demonstrate the impact outsized regulatory-driven construction cycles have on credit quality. Featured utility systems include New York City Municipal Water Finance Authority; District of Colombia Water and Sewer Authority; Atlanta, GA; Philadelphia, PA; and Miami-Dade County, FL.

While leverage among those five utilities has increased rapidly in recent years, credit quality has generally remained stable.