OREANDA-NEWS. S&P Global Ratings raised its underlying rating (SPUR) on Clute, Texas' general obligation (GO) debt one notch to 'AA-' from 'A+'. The outlook is stable.

The rating action reflects S&P Global Ratings opinion of the city's strong budgetary performance, resulting in improved budgetary flexibility and liquidity, with management sustaining available reserves above 75% of expenditures.

At the same time, the rating service assigned its 'AA-' rating and stable outlook to the city's $1.75 million series 2016 certificates of obligation.

"We do not expect to change the rating within the two-year outlook period. We, however, could raise the rating if economic expansion were to result in improved wealth and income to a level we consider more comparable with Clute's higher rated peers or if management were to maintain strong budgetary performance, coupled with significantly reduced debt," said S&P Global Ratings credit analyst Alexander Laufer. "While unlikely to occur, we could lower the rating if additional bonding were to increase the city's debt materially or if finances were to deteriorate materially, resulting in available reserves we no longer consider commensurate with the city's similarly rated peers."

The stable outlook reflects S&P Global Ratings' opinion that Clute will likely sustain its very strong budgetary flexibility and liquidity within the next two years, supported by strong budgetary performance.

A direct property tax levy, within the limits prescribed by law, on all taxable property within the city secures the series 2016 certificates. In addition, the certificates are payable from net surplus water and sewer revenue, not to exceed $1,000.

Officials intend to use series 2016 certificate proceeds to fund street and sidewalk improvements and purchase a fire pumper truck and two garbage trucks.