Moody's Investors Service said it has upgraded the city of Eagle Pass, Texas's waterworks and sewer system revenue bonds to A2 from Baa1 affecting $25.1 million in outstanding revenue bonds.
The system has an additional $485,000 in revenue debt outstanding not rated by Moody's. The bonds are secured by the city's irrevocable first lien on and pledge of net revenues from the combined water and sewer system.
The upgrade A2 reflects the system's improving debt service coverage given strong financial operations, and a favorable amortization schedule.
The rating also considers the system's modest debt ratio, growing net working capital, and a sizeable fixed asset position that provides sufficient capacity to meet current demand. Additionally, the rating incorporates a concentrated customer base, high unemployment, and depressed wealth levels.
