Georgetown, Texas utility revenue bonds rated AA- by Fitch with stable outlook

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Georgetown utility bonds rated AA-

Highlights

Fitch assigns an 'AA-' rating with Stable Outlook to Georgetown, Texas' Series 2026 utility revenue bonds, pricing expected May 13, 2026.
Georgetown benefits from exclusive utility rights, strong rate-setting flexibility, high customer growth, and 1.6% average electric bills relative to median household income.
Fitch notes combined utility leverage of 5.1x at FY-end 2025, $281 million unrestricted cash (607 days cash), and expects gradual deleveraging post-projects.

Rating action and bond sale timeline

As reported by Fitch Ratings, the agency assigns an 'AA-' rating to Georgetown, Texas' Series 2026 utility system revenue bonds, which are expected to price through a negotiated sale on May 13, 2026. Fitch also affirms the city's outstanding utility system revenue bonds at 'AA-' and assesses the standalone credit profile at 'aa-', while maintaining a Stable Outlook.

The bonds are secured by a senior lien on net revenues from Georgetown's electric, water and wastewater services. Fitch says the standalone credit profile reflects the utility's own credit strength, separate from the broader credit quality of the city, even though the system remains linked to municipal oversight for rating purposes.

Growth, affordability and financial strength

Fitch says Georgetown's revenue profile benefits from the city's exclusive right to provide retail electric, water and wastewater service in and around the city, alongside very high customer growth and limited customer concentration. Rate-setting flexibility remains strong because the city council sets rates locally without outside approval, and Fitch says electric affordability stays solid even with retail power rates above the Texas average, with the average annual electric bill equal to 1.6% of median household income.

Water and wastewater rates have risen notably in recent years, and Fitch expects additional increases as Georgetown funds expanded supply and treatment capacity to meet growth. Even so, overall charges should remain affordable for most users, while the utility's operating profile is supported by low cost burdens, including stability in the electric system from fixed-price renewable power purchase agreements.

Fitch assesses Georgetown's financial profile as very strong, citing combined utility leverage of 5.1x at fiscal year-end 2025, improved from the prior year as the city built cash flow ahead of major capital spending and debt issuance. The agency says planned projects should ease water and wastewater growth pressure for several decades, and that debt needs become modest after the upcoming projects, supporting gradual deleveraging consistent with the current rating.

Liquidity remains neutral to the rating, with Fitch-calculated coverage of full obligations averaging above 1.5x over the past five years and $281 million in unrestricted cash, equal to 607 days cash on hand at fiscal year-end 2025. Fitch adds that the utility's rating is not currently constrained by the city's broader credit quality, but a material weakening in Georgetown's general credit profile could pressure the bond rating because the system is treated as a related entity.

We previously covered El Paso’s entry into the 2026 bond market with an AA+ rating and Stable Outlook on its general obligation refunding and improvement bonds, alongside an affirmation of related outstanding debt. That update highlighted the city’s strong reserve position and improving pension metrics as key supports, while noting that weaker socioeconomic indicators and a moderately high debt burden remain constraints that could limit near-term upward rating momentum.

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