Fitch Ratings Tuesday revised its outlook for Sacramento Municipal Utility District electric revenue bonds to positive from stable.

The action came as Fitch affirmed its A rating on SMUD ahead of a planned $250 million revenue bond deal. It affects $2 billion of debt.

“The positive outlook reflects the district’s decreased variable-rate debt, improved liquidity position, and limited new generation needs,” according to Fitch.

“The two rate increases implemented over the past year, together with stable electricity sales, are expected to improve key financial metrics,” creating the potential for a one-notch upgrade, Fitch said.

SMUD serves almost 600,000 customers in the Sacramento region.

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