Standard & Poor's Ratings Services said it raised by one notch, to A-plus from A, its ratings on the city of Granbury, Texas' utility system revenue bonds.
The outlook is stable.
"The upgrade is based on the city having completed the phase-in of its recent purchased power agreement, and reflects a record of stronger finances," said Standard & Poor's Theodore Chapman. The city's transition to a new wholesale electric provider had resulted in a 28% increase in energy costs. This caused some structural misalignment between revenues and expenses for fiscal 2008 and 2009, although debt service coverage (DSC) has rebounded since.
Factors that continue to support the rating include: a stable service area economy and access to Fort Worth; fixed-price purchase power contract with Bryan Texas Utilities (BTU; A-plus SPUR); and no additional debt needs identified until closer to the end of the decade, making it likely that the robust DSC levels are sustainable.
A first lien on, and pledge of, net revenues of the city's combined retail waterworks, sewer, and electric system secures the bonds. A fully funded debt service reserve in the amount of average annual debt service provides additional liquidity.
Granbury provides retail service to about 3,200 electric; 4,400 water and 3,400 sewer customers in the city, located in Hood County about 33 miles south of Fort Worth.