S&P Global Ratings affirmed its 'AA+/A-1' rating on Houston's series 2004B-4 combined utility system first-lien variable-rate demand bonds following the substitution of the letter of credit (LOC) provider to PNC Bank N.A. from MUFG Bank Ltd. The long-term component of the dual rating reflects the application of joint criteria, assuming low correlation, where the underlying rating (SPUR) on Houston's combined utility system is 'AA' and the irrevocable direct-pay LOC provided by PNC Bank N.A. is 'A/A-1'. The long-term component of the rating addresses the likelihood bondholders will receive principal and interest payments when due. Under this structure, the paying agent is instructed to first draw on the LOC and, if there is an insufficiency and the LOC provider has failed
