MAYOR WHITE HAILS UPGRADE IN CITY'S UTILITY BOND RATINGS, SAVING HOUSTONIANS MONEY
April 1, 2008 -- Mayor Bill White today hailed as a sign of financial strength and good management the upgrade by two ratings agencies of the City of Houston's utility system bonds, which are used to improve the water/sewer system and help prevent flooding.
Fitch announced it is upgrading $4.1 billion in bonds from "A" to "A+", citing the City's program tying rate increases to the consumer price index and, therefore, ensuring funding for long-term improvements. Prior to 2004, the City had not raised water/sewer rates since 1993. Standard & Poors also upgraded the bonds from "A+" to "AA".
"At a time when the financial markets are in some turmoil, we look on this as a very positive sign about Houston," said Mayor White. "Our financial discipline and the plan we've put in place over the last four years to improve our water and drainage systems are paying off in lower financing costs. This reflects sound, fiscally responsible business practices."
Fitch, in a press release announcing the upgrade, said of Houston's Water and Sewer bonds: "The utility system's undertaking of the 2004 debt restructuring and modifications to the master ordinance featuring automatic rate adjustments and some tightening of uses in the general purpose fund with the limitation on the annual transfers for the drainage utility purposes facilitated the system's improvement of its financial margins. On an all-in basis, coverage levels improved to 1.7 times (x) in fiscal 2006 from 1.3x in fiscal 2004. More notably and reflective of the system's service rate increases, its liquidity improved markedly to 210 days cash-on-hand and 571 days of working capital (excluding the general purpose fund), compared with 99 days cash-on-hand and 115 days working capital in fiscal 2004." (See http://biz.yahoo.com/bw/080331/20080331006704.html?.v=1)
