Dive Brief:
- As federal financing for electric cooperatives through the Rural Utilities Service (RUS) loan program has slowed, cooperatives have successfully tapped other funding sources to meet their capital needs, according to Fitch Ratings.
- While RUS remains the largest funding source for cooperatives, utilities are tapping private placements, syndicated bank credit facilities and other capital markets transactions for financing, Fitch said.
- Broader access to capital and liquidity supports the credit quality of the cooperative sector because access to varied sources of finance can lower borrowing costs, according to the ratings agency.
Dive Insight:
Like all utilities, cooperatives are investing in their transmission and distribution systems, renewable projects and pollution control equipment for power plants. Access to the capital markets and strong credit ratings is key to keeping the financing costs for these projects as low as possible.