S&P Global Ratings raised its rating to 'AAA/A-1+' from 'AA/A-1+' on Houston, Texas' series 2004B-5 combined utility system (CUS) first lien revenue refunding bonds upon the anticipated closing of a new direct-pay letter of credit (LOC) providing liquidity support for the bonds. The outlook, where applicable, is stable. The raised rating reflects that of the new LOC provider, Royal Bank of Canada. The bonds are secured by net CUS revenues but are junior to the lien securing the previous ordinance bonds. We consider the bond provisions credit neutral, which includes a rate covenant set at 1.2x the combined debt service on all previous ordinance and first lien revenue bonds. The CUS has roughly $6.0 billion in first lien revenue debt
