Fitch rates W. Palm Beach, Fla., utility bonds AA-, drops outlook to negative

Fitch Ratings said it assigned an AA- rating to the city of West Palm Beach, Fla.'s $55.9 million series 2008A utility system revenue refunding bonds and $14.7 million series 2008B utility system revenue bonds, and revised the outlook to negative from stable.

The bonds are scheduled for negotiated sale on June 17.

Fitch also affirmed the AA- rating on the $87.5 million utility system revenue bonds that will remain outstanding.

The outlook downgrade reflects Fitch's concern that the system may face financial pressure as a result of rapidly increasing costs from a sizable capital improvement program and conservation measures related to ongoing drought conditions. Capital expenses will be higher than anticipated, Fitch said, largely due to water-quality issues identified by the Palm Beach County Health Department during routine water testing.

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