Eve though it is sandwiched between bankrup Bridgeport and fiscally ailing New HAven, Milford has managed to maintain a sound budget, according to Colleen Woodell, a senior vice president at Fitch Investors Service.

So the agency assigned a rating of AA to the city's general obligation debt in anticipation of its offering this week of $8.18 million in bonds. The rating also applies to Milford's outstanding debt of $32.3 million.

The city also expects to sell $6.23 million bond anticipation notes.

Fitch said the city's fiscal outlook is bright, in spite of its proximity to Bridgeport and New Haven.

The severity of Bridgeport's fiscal problems became clear June 6, when the city's mayor filed a Chapter 9 bankruptcy petition. And bankruptcy has also been proposed by a New Haven official.

But Milford, according to Ms. Woodell, is a different story. She predicted that the city's bonds will be insulated from its neighbors' problems.

"They certainly do stand on their own and really don't have any fall-out from either Bridgeport or New Haven," Ms. Woodell said.

Bridgeport's bankruptcy petition was rejected Aug. 1 by federal Judge Alan H.W. Shiff on the ground the city was not insolvent. Now, with new evidence, Bridgeport is reopening hearings in Bankruptcy Court.

Success for Bridgeport in its bid for court protection could hurt Milford because one of the bankrupt city's objectives is to change its payment in lieu of taxes agreements with the Connecticut Resource Recovery Authority. The authority operates a Bridgeport incinerator that receives garbage from Milford and other towns.

While Ms. Woodell said increased charges to the authority could be passed along to the cities that send garbage to the incinerator, she added that the effects of any increases would be minimal.

And while Major Mary C. Moran of Bridgeport has said her city's richer neighbors should help bear its burdens, she will have few options in bankruptcy court.

"Outside of the resource recovery plant, I'm not sure how she's going to be able to get her hands on any of the suburban wealth," Ms. Woodell said.

The only real risks to purchasers of Milford debt, the analyst said, stem from the city's lack of wealth relative to other Connecticut issuers.

"If you forget about Bridgeport and New Haven, there's a lot more money in other places than in Milford," Ms. Woodell said. The Fitch executive described the incomes of the city's 50,000 residents as "average."

In addition, Milford has a small economic base. The city's largest employer is the BIC Corp., which employs 1,120 workers in Milford and has its national headquarters there.

Among the strengths cited by the rating agency were good financial management and "manageable debt levels."

The city has a debt burden of $727 per capita, according to Fitch. Its budget for the current fiscal year is $93.5 million, up from $90.2 million last year.

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