Fitch Ratings has affirmed its current BBB rating for Tufts Medical Center’s debt, while handing a coveted AAA rating to Cambridge’s new bonds.

Tufts issued $210 million in Massachusetts Development Finance Authority revenue bonds series I last year. Fitch describes the group’s 2011 fiscals year results as "solid," with operating and operating EBITDA margins of 1.7 percent and 5.2 percent, respectively. But it warned that Tufts faces challenges in 2012. The first-quarter results of this fiscal year showed a sharp deterioration in results, with operating margin of -1.1 percent and an operating EBITDA margin of -2.7 percent, due in part to softer volumes and lower managed care Medicaid reimbursement. Fitch expressed confidence, however, in Tufts’ management’s ability to respond to these challenges.

The ratings agency said while it was "concerned about the significant drop-off in operating performance in the first quarter of fiscal 2012, concerns are mitigated by Tufts’ management’s quick reaction to improve operations, and Tufts’ manageable debt burden which provides some financial flexibility at the current rating level. However, should operations fail to improve, negative rating action may be warranted."

The agency also released a report on a new issue of general obligation bonds by the City of Cambridge. Cambridge plans to roll over $35.1 million in debt on March 8, which will mature in 2026.

Fitch’s report on the issue is glowing, citing the city’s exceptional financial management, above-average liquidity levels and diverse economic base.

"The stable presence of higher education, healthcare, biotechnology, and life sciences industries supports [a] well-diversified economy with low unemployment and above-average wealth levels…[d]ebt levels are moderate and expected to remain manageable, aided by the city’s rapid amortization rate," the report said.