In recent weeks, S&P Global Ratings removed the debt ratings of 14 North Carolina and Tennessee entities from CreditWatch, where they had been placed with negative implications in October 2024 following Hurricane Helene. The CreditWatch with negative implications placement for one rating, Asheville, N.C.'s water system, was maintained. A list of all affected entities is below.

Local Governments

We affirmed all local government ratings but assigned a negative outlook to three of them. The outlooks on the other eight ratings are stable.

• The negative outlook on the general obligation ratings for Asheville, N.C.; Buncombe County, N.C.; and Unicoi County, Tenn., broadly reflects our view of the economic pressure these entities might face in the aftermath of the storm, which could impair revenue generation and weaken our view of their finances. A negative outlook reflects a one-in-three chance that we could lower the rating in the next two years.
• The stable outlook on Blowing Rock, N.C.; Haywood County, N.C.; Henderson County, N.C.; Hendersonville, N.C.; Newport, Tenn.; Rutherford County, N.C.; Washington County, Tenn.; and Watauga County, N.C., reflects our expectation of a manageable impact from storm damage on each tax base, coupled with strong reserve positions that we do not expect will materially weaken despite the regional storm-related economic disruption.

We will continue to monitor the economic recovery and how it ultimately translates to revenue collections, particularly for property and sales taxes. In general, ample reserves offset the near-term potential retail shocks related to commercial closures. We note that property taxes remain somewhat stable; however, we will continue to monitor the rate at which these entities can recover delinquent taxes relative to previous years. We expect all of our rated local governments will receive significant reimbursement from the state or Federal Emergency Management Agency for storm-related expenditures. We view Asheville's recovery timeline as significant to the entire region given its role as the largest city in southwest North Carolina, a tourist destination, and employment base for many surrounding communities.

The commitment of North Carolina and Tennessee to restore the region underpins our established view of system support to counties and municipalities, as reflected in our institutional framework assessment for local governments (for more information, see our "Institutional Framework Assessment: North Carolina Local Governments," published Sept. 9, 2024, on Ratings Direct, and "Institutional Framework Assessment: Tennessee Local Governments," published Sept. 11, 2024.

Utilities

We affirmed the ratings on Greeneville, Tenn.'s and the Erwin Utilities Authority (EUA), Tenn.'s water and sewer system revenue bonds, but assigned a negative outlook to both. Furthermore, we lowered our rating by one notch on and assigned a negative outlook to EUA's electric system revenue bonds. Finally, our rating on Asheville, N.C.'s water system remains on CreditWatch with negative implications.

• For Greeneville's water and sewer system, we could lower the rating should the commission's cash fall to levels commensurate with those of lower-rated peers due to expense increases, capital requirements that are not reimbursed on a timely basis, or other factors. The negative outlook on EUA reflects our uncertainty regarding the impact of necessary wastewater system capital repairs on the system's financial profile over the outlook period.
• The downgrade and outlook for EUA's electric system revenue bonds reflect the utility's recent weak financial performance coupled with projections of further declining financial metrics, along with uncertainties as to whether industrial customers will relaunch their storm-damaged business operations once electric service is restored.
• The CreditWatch with negative implications placement on Asheville's water system revenue bonds reflects a one-in-two chance that we could lower the rating over the next three-to-six months, depending on the outcome of the city's fiscal 2026 budget process and clarity regarding the city council's near-term rate plans for the water system.

We will continue to assess the costs of infrastructure investments for each utility, and how potential customer displacement affects coverage and liquidity. For Asheville's water system revenue bonds, we are monitoring the pace of economic recovery and the upcoming budget process, specifically if coverage or unrestricted cash is likely to substantially decline from historical levels on a sustained basis (for more information, see "Asheville, NC Water System Revenue Bond Rating Remains On CreditWatch Negative," published Jan. 13, 2025).