SMUD’s credit rating highest in three decades
Two of the three leading credit agencies have raised their assessment of SMUD’s credit worthiness. Fitch and S&P upgraded SMUD’s credit ratings to AA, from AA-. Meanwhile, SMUD’s credit worthiness continues to be rated Aa3 by Moody’s. This is the strongest SMUD’s credit ratings have been in 33 years.
The agencies cited improved finances, sound operating fundamentals, competitive rates and a diverse energy portfolio among the many reasons they raised their assessment of SMUD’s credit worthiness.
Exceeding financial goals helps SMUD maintain solid credit ratings and provides for lower interest rates when SMUD borrows. The upgrades are expected to save three basis points (0.03%) on SMUD’s upcoming bond transaction, which is worth $350,000 net value over the term of the debt. Additionally, SMUD will continue to pay lower interest rates every time the electric utility issues debt in the future.
According to Fitch: “The rating upgrade reflects the district's strong and sustainable financial performance, moderate leverage with manageable capital needs, and management's proactive plans to comply with environmental mandates and adapt to a rapidly evolving industry.”
S&P noted: “We have assigned SMUD a business profile score of '3' on a 10-point scale, with '1' being the highest, reflecting our view of SMUD's competitive electric rates, diverse and coal-free resource portfolio, strong financial management, and stable and diverse service territory.”
As the nation’s sixth-largest community-owned electric service provider, SMUD has been providing low-cost, reliable electricity for 70 years to Sacramento County (and small adjoining portions of Placer and Yolo Counties). SMUD is a recognized industry leader and award winner for its innovative energy efficiency programs, renewable power technologies, and for its sustainable solutions for a healthier environment. SMUD’s power mix is about 50 percent non-carbon emitting. For more information, visit smud.org.