The 'A-' rating on Austin, Texas' water and wastewater system revenue refunding bonds reflects: A subordinate lien on net revenues of the water and wastewater system, junior to about $1.2 billion in combined prior-lien utility system obligations; A sizable capital plan of about $570 million over the next five years, of which as much as 70%-75% is expected to be financed with additional debt; and Liberal legal provisions, including a flexible additional bonds test, which is a concern given the large capital plan. Factors that moderate these concerns include: A long-term water supply agreement with the Lower Colorado River Authority (LCRA); The strong wealth and income levels of the Austin MSA, despite general economic downturns; and, A strong debt service
