Moody's lifts Houston utility bonds to Aaa/VMIG1

Moody's Investors Service said it upgraded the rating to Aaa from A2 on the City of Houston Combined Utility System's $135.55 million of first-lien revenue refunding bonds, series 2004B3 and 2004B9.

At the same time, Moody's said it assigned a short-term rating of VMIG1 to the bonds.

The actions were taken in conjunction with the conversion of the bonds to a weekly interest rate mode from an auction-rate mode and with the delivery of irrevocable direct-pay letters of credit from Bank of America NA, State Street Bank and Trust Co., Bank of New York and Dexia Credit Local.

The short-term rating is effective upon conversion of each sub-series of the bonds, which was expected on April 10.

Upon conversion, the two sub-series will be re-designated as series 2004B2.

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