Moody's Investors Service last week upgraded the rating on Omaha's sewer revenue bonds to Aa from AI.

Moody's raised the rating because the city has displayed well-managed financial operations over the last few years, said Jerry Caden, a vice president in the agency's central regional ratings group. The city's sewer system also has a "very favorable" debt position, Caden said.

The city does not have any plans to issue bonds for its sewer system in the next five years, Caden said. Omaha's five-year $30 million capital improvement program for the system will be funded entirely with available system surplus money, he said.

Permit negotiations with Nebraska related to the sewer system's two treatment plants pose "some uncertainty," Caden said. However, he said, the city expects timely resolution of the permit process and estimates that the additional cost of meeting new requirements will not exceed a "manageable" $3 million.

Caden also said that Omaha's diverse economy was a factor in the upgrade.

Moody's raised the city's sewer revenue bond rating in conjunction with a $26.8 million refunding issue scheduled to be sold today.

The offering advance refunds all of the system's outstanding sewer revenue debt. Based on conservative estimates, bond coverage ratios are expected to remain at two times annual debt service, Caden said.

Standard & Poor's Corp. rates the city's sewer revenue bonds AA.

-- April Hattori, Chicago

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