Standard & Poor's Ratings Services said it raised its underlying rating by one notch, to A-minus on the city of Fate, Texas' series 2011 waterworks and sanitary sewer revenue refunding and improvement bonds.

The outlook is stable. The upgrade affects about $7 million of revenue bonds.

"The upgrade reflects the improved financial health of the utility fund, which we believe is sustainable," said Standard & Poor's credit analyst Theodore Chapman.

The utility fund has demonstrated solid debt service coverage, and given the health of the general fund and a codified transfer policy, the city's major operating funds are all self-supporting. The fiscal 2012 general fund balance, for example, was roughly 74% of operating expenditures, and transfers are limited to a franchise fee equivalent payment plus reimbursement for indirect costs.

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