Fitch Ratings has affirmed its AA rating for the Albuquerque-Bernalillo County Water Utility Authority’s $55.5 million joint water and sewer system improvement revenue bonds, expected to price this week.

Bond proceeds will be used for system capital improvements, including funding a portion of the authority’s San Juan-Chama drinking water project, and paying costs of issuance. The bonds are expected to be sold via negotiation with RBC Capital Markets.

“The AA rating reflects the system’s favorable operating performance, rapid debt amortization, healthy service area, and the availability of adequate water supply through at least the next 40 years,” Fitch analysts wrote.

The utility is nearing completion of several large water supply projects, including San Juan-Chama system, with ongoing capital costs expected to fall sharply within the next couple of years. The San Juan-Chama project diverts water from the Upper Colorado River Basin in northern New Mexico and southern Colorado and transports the water through tunnels to the Rio Chama, which flows into the Rio Grande at a point north of the town of Española. The surface water will be purified at a treatment plant upstream of Albuquerque before it enters into the public water system.

The utility sold $56 million of bonds in December that carried a AA rating from Standard & Poor’s, which has not yet issued its report on the upcoming deal. Moody’s Investors Service upgraded the utility to Aa2 from Aa3 in 2006 but has not issued a report on the upcoming bonds.

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