DALLAS - Standard & Poor's raised its general obligation rating on Lufkin, Tex., to AA-minus from A-plus ahead of a $17.5 million issue of water and sewer certificates of obligation.
Although the certificates are backed by a tax pledge, they carry the same ratings as GO debt.
Moody's Investors Service rates the debt A1. Fitch Ratings does not provide an underlying rating.
Standard & Poor's cited the East Texas industrial city's long history of conservative budgeting practices and consistently stable fiscal results in the upgrade.
"We believe the city's ability to maintain moderate debt levels using its utility fund and keeping reserve levels at or above its current reserve levels is key to rating stability," said analyst Sarah Smaardyk.
Lufkin's economy is built around Lufkin Industries, a global supplier of oil field and power transmission products, as well as other manufacturers and companies producing timber products and paper.
The city maintains a moderate overall debt burden, coupled with limited capital needs in the future, according to analysts.
With a population of 34,962, Lufkin serves as a regional retail and medical center for Angelina County and much of deep East Texas.
