The New Orleans Sewerage & Water Board water system revenue bonds were downgraded to BBB-plus from A-minus by S&P Global Ratings, which also cut its outlook to negative from stable.
S&P cited the board's persistent infrastructure challenges, physical risk exposure and heightened uncertainty about the board's financial and operational trajectory.
As reasons for the lowered outlook, S&P pointed to the system's limited rate-setting flexibility and reliance on external funding sources, including federal disaster aid, state loans, tourism-related revenues and city general fund support.
There is "systemwide fragility characterized by accelerating distribution system failure rates and operational reliability concerns," S&P said.
"Absent meaningful improvements in both infrastructure reliability and revenue generation, [the board's] credit quality will remain pressured in the medium-to-long term," S&P said.
S&P said high poverty levels in the service area limit the system's willingness and ability to implement necessary rate adjustments.
S&P noted the
S&P believes the city's employment and income growth will lag those of the state and the nation through 2029.
Debt service coverage was 1.99X in 2025, according to unaudited figures, but is expected by S&P to decline to 1.5 in 2028.
The
The board didn't immediately respond to a request for a comment.
Fitch Rating rates the water revenue bonds BBB-plus. Neither Moody's nor KBRA responded to an inquiry about any ratings they might give the bonds.
