Standard & Poor’s kept Corpus Christi’s “AA” credit rating in place on Wednesday.

The rating applies to the city’s general obligation bonds, certificates of obligation, and limited-tax notes. While the rating remains in the high-grade category, S&P changed the city’s outlook from “stable” to “negative.”

However, the agency says drought and water supply concerns continue to put pressure on the city’s financial outlook.

The change means the agency is closely monitoring how the ongoing drought and water shortages could affect the city financially in the future.

Corpus Christi city officials said the outlook could return to stable if Corpus Christi keeps balanced finances, maintains reserve funds, and increases water supplies enough to avoid or recover from a possible Level 1 Water Emergency without major long-term damage to the local economy.

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The update follows an earlier downgrade this month, when S&P lowered the city’s utility system rating from AA-minus to A due to drought concerns and uncertainty about future water supplies.

Moody’s and Fitch Ratings also downgraded the city’s utility rating late last year.

Credit ratings are important because they can impact how much cities pay to borrow money for major projects. Lower ratings can mean higher borrowing costs.

Corpus Christi is currently working on several large water supply projects, including groundwater expansion plans and the proposed Inner Harbor desalination plant, amid ongoing drought conditions across South Texas.