5 ways to improve your utility’s bond credit rating, lower interest payments, and use the savings for operations instead of paying bondholders
- Apr 27, 2021 12:02 am GMT
Debt in an electric utility/coop is a good thing?
Debt is part of the utility business. Utilities build long-term infrastructure, with a useful life of 30-40 years to serve customers and finance that infrastructure with long term debt. Customers pay for debt service on that debt thought their rates, charged for current use of the system.
As of the date of this article (early 2021), it is a good time to borrow for utility projects as rates are near historical lows and the longer term bond yield curve is pointing to future higher rates and inflation.
Bond ratings from the major ratings agencies (S&P, Moody’s, Fitch) are the report card that determines the interest rate paid by a utility when issuing long-term debt.
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