Gulf County Bonds Junked

Moody’s Investors Service Tuesday downgraded Gulf County’s limited ad-valorem tax bond rating to Ba1 from Baa3.

The downgrade to below investment grade affects $6.6 million of outstanding debt secured by millage rates levied and collected in two municipal-services taxing units established to fund beach reconstruction at Cape San Blas, a premier beach vacation destination.

“The downgrade reflects that the MSTU’s pledged revenue is insufficient to fully cover annual debt service and the severe decline in … the MSTU’s tax roll in fiscal 2010,” a report from Moody’s said, noting that another factor in the downgrade is the area’s small and vulnerable tax base and permanent population.

Analysts also said management has adopted an ordinance allowing the operating millage rate to be raised to generate sufficient funds to pay debt obligations.

In response to similar concerns, Fitch Ratings in April dropped its rating on Gulf County’s debt to BB from BBB with a negative outlook.

The mostly rural county is about 35 miles southeast of Panama City.

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