Standard & Poor's Ratings Services said it raised its rating on Cedar Park, Texas' bonds outstanding to AA-plus from AA.
The outlook is stable.
"The upgrade reflects what we view as the city's very favorable financial position that includes a trend of strong debt service coverage and liquidity," said Standard & Poor's credit analyst James Breeding.
At the same time, Standard & Poor's assigned its AA-plus rating and stable outlook to Cedar Park's series 2013 utility system revenue refunding bonds.
A first-lien pledge of net water and sewer system revenues secures the bonds.
The ratings reflect the utility system's: stable customer base and system operations; focus on regionalization in its capacity as a means to further enhance development at reasonable costs; and very manageable capital improvement program, coupled with an amortization schedule that should allow for additional debt to issued, as needed, without adversely affecting the financial position of the system.
While rates are somewhat elevated, wealth and income levels in the service area can support these. Additional rate increases should be moderate.
The stable outlook reflects the agency's expectation for Cedar Park's continued high debt service coverage levels and strong cash position. These credit strengths should continue to shield the city's utility system from revenue volatility due to changes in weather, demand, and usage. Future capital needs are lessening as the city nears its population build-out, so pressure on rates and concerns regarding leverage should diminish.
Cedar Park, with an estimated population of 59,776 residents, is a rapidly growing community 16 miles northeast of the state capital of Austin.