Corpus Christi has credit ratings downgraded amid water crisis

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Vintage illustration of Greetings from Corpus Christi, Texas, Wonder City of the South, large letter vintage postcard, 1940s. (Photo by Found Image Holdings/Corbis via Getty Images)

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CORPUS CHRISTI, Texas - The looming water crisis in Corpus Christi has led to the nation's largest credit agencies to downgrade the city's credit ratings or threaten to downgrade its ratings.

As of Monday, all three major credit rating agencies – Moody's, Fitch Ratings and Standard and Poor's –  have either downgraded the city or placed it under review as the city works to find solutions to its water troubles and prevent a level one emergency.

Moody's downgrades city's credit rating, places city under review

Moody's was the first credit agency to adjust the city's rating. In December, the agency downgraded the city from its AA credit rating to A. Then last month, Moody's placed the city "under review." The city said on April 16 that the agency's review period was expected to last between two and six weeks.

What they're saying:

"We are committed to full transparency and frequent communication with Moody’s throughout this process," City Manager Peter Zanoni said in a statement. "This review period provides an opportunity to showcase the concrete steps the City is taking to secure our water future and maintain our financial resilience."

Fitch Ratings revised their outlook on the city in April, but stopped short of downgrading its credit rating.

Fitch changed the city's rating outlook from stable to negative amid "heightened uncertainty from the city's elevated water supply risk and potential effects on its economy."

S&P also lowers Corpus Christi credit rating, places city on ‘credit watch’

Just Monday, S&P lowered Corpus Christi's credit rating "two notches" to A from AA- based on the city's "outstanding utility system revenue debt," while placed the city on a CreditWatch with negative implications.

What they're saying:

"The rating downgrades reflect our view of the utility system's current acute drought risk and the potential need to declare a Level 1 water emergency in September, which could result in mandatory water curtailments across its customer base," S&P said in a statement. "We believe the utility's heightened execution and operational risks will likely weaken its all-in coverage metrics in fiscals 2026 and 2027 to well below historical levels, because of the necessity of securing additional water supply resources in the immediate term combined with its $1.4 billion in additional debt needs during the next three years."

How does the city's credit rating impact its residents?

A city's credit rating operates similar to an individual's credit rating meaning interest rates are determined by the rating which impacts how much a city much pay back in interest on loans.

When a city pays a higher interest rate, those costs are generally passed on to the city's residents and businesses through higher utility rates.

Corpus Christi could reach a level 1 water emergency by September

Corpus Christi is facing a serious water crunch. With a historic drought hitting hard and industrial demand climbing, experts are worried that one of the nation’s most important energy hubs could be in real trouble.

Corpus Christi officials have maintained that the situation is being managed. City leaders have pointed to a $1 billion water strategy that includes expanding groundwater access, increasing pipeline capacity, recycling water and pursuing seawater desalination projects.

State leaders, such as Texas Governor Greg Abbott, have expressed concern about the pace of progress. Abbott has warned that Texas could step in if necessary to ensure a stable water supply for the region.

Governor Abbott on Corpus Christi water crisis

Lake Corpus Christi has hit a record low of 10% capacity, with models warning of a potential "water emergency" by November 2026. Governor Abbott has threatened a state takeover due to "local indecision," while city officials insist a $1 billion infrastructure plan is already securing the supply. The city is fast-tracking groundwater and desalination projects to add 76 million gallons per day, with a key council review set for April 2026.