Despite the national chaos over finances, the city was able to sucessfully raise $205 million through a public offering of water system bonds last week.

At a time of failing credit quality throughout financial markets, Standard and Poor's Ratings Service actually raised its rating of Seattle's Water System bonds, from AA to AA+ in the days immediately preceding the bond sale. Seattle's strong track record and high credit ratings enabled it to take the lead on competitive pricing.

"The new S&P rating is a strong endorsement of our financial management plan for the city's water system," said Mayor Greg Nickels. "This higher bond rating will allow us to secure better terms in the bond market and lower interest rates for our rate payers."

Nickels said the success of the latest rating from Standard and Poors is evidence that changes in financial management and policies implemented over the last six years at Seattle Public Utilities continue to bear fruit.

Seattle's bond sale was by far the largest competitive issue sold since mid-September, receiving five bids from underwriters. Merrill Lynch was the successful bidder at an average interest rate of 4.99 percent.

The city's director of debt financing, Michael Van Dyck, said that the success of Seattle's issue demonstrates a return of rationality to the municipal bond market and that there is a strong demand for high quality investments, such as bonds offered by the city of Seattle.