Standard&Poor's Ratings Services affirmed its 'A' underlying rating (SPUR), with a stable outlook, on Philadelphia, Pa.'s water and sewer revenue debt. In our opinion, the rating reflects: Despite the reliance on rate stabilization support, financial performance has been stable. With the rate stabilization funds, coverage of senior-lien debt service is adequate at 1.20x with 1.08x coverage of revenue debt and transfers into the general, capital, and residual funds. Rates, which are currently low, are expected to rise to only moderate levels due to proposed rate increases to take effect Fall 2008. The last rate increase of 3.8% was effective July 1, 2007; and rate increases are expected to range from 5%-10% over each of the next five years.
