NEW YORK - Standard & Poor's Ratings Services said it raised its underlying rating (SPUR) on Sugar Land, Texas' water and sewer revenue bonds to AA-plus from AA. Standard & Poor's also assigned its AA-plus long-term rating to Sugar Land's series 2012 waterworks and sewer system revenue bonds. The outlook remains stable.
"The upgrade reflects the utility system's strong financial performance and liquidity position," said Standard & Poor's credit analyst James Breeding.
In addition to the strengths mentioned above, the rating also reflects the assessment of the system's: service area, which is diversified and continues to exhibit high wealth and income levels; competitive rates, with the demonstrated willingness to adjust those rates to help maintain a sound financial performance; and affordable capital improvement program.
The utility system's primary challenge is the need to reduce its reliance on groundwater.
Net revenues generated from water and sewer system operations secure the bonds. Officials plan to use utility system revenue bond proceeds to fund a number of utility-related capital improvements.
The stable outlook reflects S&P’s expectation that coverage of annual debt service will remain at high levels as Sugar Land addresses its capital needs. Willingness to increase rates and maintenance of strong liquidity level also support the stable outlook. S&P does not anticipate funding of the system's capital improvement program to adversely affect financial ratios.
