Standard & Poor's Ratings Services said it has raised its rating on the city of Austin, Texas' separate-lien electric utility system revenue bonds outstanding to AA-minus from A-plus.
At the same time, Standard & Poor's assigned its AA-minus rating to Austin's electric utility system revenue refunding bonds, series 2012A and 2012B.
Standard & Poor's also affirmed its AA underlying rating (SPUR) on the city's prior first-lien combined utility revenue bonds, which are secured by net revenues of electric, water, and sewer system revenues. The outlook is stable.
"The upgrade reflects our view of Austin's financial forecast that takes into account recent budget actions, particularly a rate increase, that we expect will increase debt service coverage levels," said Standard & Poor's credit analyst Peter Murphy.
The ratings reflect the general creditworthiness of the system, known as Austin Energy, which includes its: diversified generation resource mix that consists of coal, gas, and efficient nuclear for base load; competitive rates, even with the recent rate increase adopted in fiscal 2013, and a rate structure that also includes a separate cost-recovery component that allows Austin Energy to true-up for fuel costs or purchased-power costs; strong liquidity, including designated cash reserves that the city codified through a comprehensive risk-management plan; and service area that is not concentrated in revenues from its principal customers and continues to exhibit steady customer growth and very solid overall income levels. In addition, the Austin metropolitan statistical area continues to rebound from the effects of the IT sector's economic slump earlier in the decade.
