Fitch Ratings said in a report Tuesday it kept $65 million of Anchorage, Alaska, sewer revenue bonds at AA.
The agency said the sewer utility, which provides wastewater service to 95% of the city, has had consistently good financial performance.
The utility’s net revenues secure the bonds after payment of maintenance and operational expenses.
Fitch said debt service coverage has averaged 4.4 times over the last three years ending in fiscal 2011.
The sewer agency’s rates are low and are regulated by a state agency, but Fitch noted the utility has had little problem in the past securing approval for rate increases.
“The utility’s ongoing use of significant debt financing for renewal and replacement capital needs is a weakness, potentially reducing future debt capacity that may be needed to address elevated regulatory treatment requirements,” Fitch said.
The rating agency also said it is concerned about the utility potentially having to make upgrades in accordance with Environment Protection Agency regulations, which “could put downward pressure on the rating.”