Standard & Poor's Ratings Services said it has raised its rating on Katy, Texas' general obligation bonds one notch to AAA from AA-plus.
The outlook is stable.
"We base the upgrade on improving economic indicators and on our revised local GO criteria released Sept. 12, 2013," said Standard & Poor's credit analyst Ann Richardson.
The rating reflects the assessment of the following factors for the city: an economy considered strong; budgetary flexibility that remains very strong; the city's budgetary performance has been strong overall; very strong liquidity that supports Katy's finances; management conditions we consider strong, with "good" financial practices; a very strong debt and contingent liability profile; and a strong Institutional Framework score for Texas municipalities.
The stable outlook reflects Katy's consistent financial performance and strong economy, which good management supports. The agency does not expect to change the rating in the next two years because it believes the city will maintain a very strong fund balance and its economy will continue to grow.
Although it does not view it as likely to occur in within the outlook horizon, a deterioration in budgetary performance or significant change to the city's debt and liability profile could lead it to lower the rating.
