Business World

Combined Austin Energy and Austin Water bonds totaling about $200 million garnered "AA-" ratings and are scheduled to sell next month, Fitch Ratings reported Friday.

The utility revenue refunding bonds were rated in two series of $98.8 million tax-exempt and $100.9 million in direct subsidy-build America bonds. The release said the bonds are expected to sell via negotiation early next month. They are secured through the utility company's net revenue.

The rating agency also reaffirmed grades for three city of Austin outstanding bonds: $498 million in outstanding combined utility system revenue bonds at "AA-"; $1 billion in outstanding city of Austin electric utility system revenue bonds at "AA-"; and $1.5 billion in outstanding water and wastewater system revenue bonds at "AA-."

Overall outlook was listed as stable cash advance companies. Fitch cited Austin Energy's stable service territory, diverse supply mix and competitive rates. The agency said rate increase delays could cause some concern to creditors and though Austin Energy has low debt, that could change as the company pursues 35 percent renewable energy by 2020.

"While rates are competitive and fuel adjustment charges are adjusted regularly, the utility's base rates have not been changed since 1994," Fitch said in the release. "Raising some concern about city council's willingness to raise rates in the face of declining financial performance"

Austin Energy powers more than 407,926 customers and Austin Water provides treated water and wastewater to about 209,994 and 196,842 customers, respectively.

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