2008-10-02 04:30:02 -

- In the course of routine surveillance, Fitch has upgraded to 'AA-' from 'A+' the rating on the City of San Angelo, Texas' $18.1 million of outstanding waterworks and sewer system improvement and refunding revenue bonds, series 2001. The Rating Outlook is Stable.

The upgrade to 'AA-' from 'A+' reflects the combined water and sewer system's (the system) continued

financial improvement. Debt service coverage levels have well exceeded earlier estimates and are expected to remain favorable over the near- to intermediate-term. In addition, the city has increased planning efforts and formalized certain policies, which should ensure continued strong performance.

The 'AA-' rating reflects the system's strong debt service coverage, sound liquidity levels, manageable capital plan, stable and diverse service area, and relatively high user charges. Annual debt service coverage and liquidity have trended upward over the last five years, reaching healthy levels for fiscal 2007; fiscal 2008 figures are expected to demonstrate similar results. Capital needs are moderate, but leverage ratios are currently low to moderate and should remain consistent with the rating category even with additional planned borrowings.

Fitch issued an exposure draft on July 31 proposing a recalibration of tax-supported and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research 'Exposure Draft: Reassessment of the Municipal Ratings Framework').

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, Austin
Doug Scott, 512-215-3725
Steve Murray, 512-215-3729
or
Media Relations:
Cindy Stoller, 212-908-0526, New York