The rating on El Paso, Texas' notes reflects the water and sewer system's long-term creditworthiness ('AA' senior rating) and additional liquidity provided by a revolving credit agreement with Bank of America National Trust&Savings Association. The system's 'AA' rating reflects healthy customer base growth, a strong internal debt service coverage target, and rates that provide flexibility for increases necessitated by a large capital program. A higher rating is precluded by a large, $225 million capital improvement program that is expected to be primarily debt financed. El Paso provides water and sewer service to a population of about 601,700 in and outside the city. Annual customer base growth is a manageable 1.5%. Economic stability is provided by the Fort Bliss
