S&P Global Ratings affirmed its 'AA' rating on Ann Arbor, Mich.'s outstanding water revenue debt. The outlook is stable. The bonds are secured by the net revenues of the city's water system. We view the bond provisions as credit neutral, including a rate covenant set at 1.25x annual debt service and an additional bonds test set at 1.25x annual debt service. The water system had about $27 million of total revenue debt outstanding as of June 30, 2022. The rating affirmation reflects our view of the water utility's continued financial strength, which has been supported by proactive rate increases and a stable customer base. These strengths are offset by the city's significant six-year capital plans, which is estimated to cost
