Moody's Investors Service upgraded the San Francisco Metropolitan Transportation Agency to Aa2 from Aa3 ahead of a $75 million bond sale this month.
The upgrade applies to $205 million of outstanding revenue bonds, including the new issuance.
Proceeds of the $75 million bond sale, expected to price on or around Nov. 18, will fund portions of the MTA's capital program.
"The upgrade to Aa2 rating reflects a steady trend of positive financial operations, significantly improved liquidity levels, limited plans for the issuance of new parity debt, and the strength of the city and regional economies," analysts said in the credit report.
Credit challenges included rising fixed costs attributable to pensions and significant capital needs for a complex multimodal system.
"The outlook on the rating is stable, recognizing the agency's positive governance structure, its limited borrowing plans, and the strength of the city and regional economies," analysts said.
The MTA provides transportation services to the city of San Francisco.
The agency was created by the consolidation of the San Francisco Municipal Railway, the Department of Parking and Traffic, and the Taxicab Commission.
On Nov. 4, San Francisco voters approved a $500 billion transportation bond measure.
"Through the passage of Prop A, voters have affirmed the importance in improving transportation in our city," said MTA's Director of Transportation, Ed Reiskin.