...S&P Global Ratings withdrew its '##' rating on the Houston Combined Utility System (CUS), Texas' series 2012B revenue bonds at the city's request. At the same time, S&P Global Ratings affirmed its '##' long-term rating on the system's working-lien debt. The outlook is stable. We understand that on the mandatory tender date of June 1, 2017, the city executed a direct purchase arrangement with State Street Public Lending Corp. and that the bonds will be remarketed, likely in a floating rate, indexed mode. The series 2012B bonds are still considered parity debt under the 2004 CUS master resolution. The rating reflects, in our opinion, the combination of an extremely strong enterprise risk profile and a very strong financial risk profile, despite acknowledged existing and expected future liabilities both related to its capital improvement plan (CIP) and the city-wide pension plans. The recent Texas state legislature action towards providing the city with overall pension plan reform is, in our...
