The South Carolina Heritage Trust was downgraded last week to A2 from A1 by Moody’s Investors Service because of “severe declines” in real estate values and transactions that provide revenue supporting bonds sold in 2006.
The downgrade affects $16 million of outstanding debt secured by state deed-recording fee revenue dedicated to the state’s Heritage Land Trust Fund, which is administered by the Department of Natural Resources. The bonds were issued for a land conservation project.
For the fiscal year ending June 30, 2010, deed-recording fee revenue was $3.04 million or 1.7 times maximum annual debt service. This “represented a significant decrease” from the 2 times coverage in previous years, Moody’s said. Revenues have fallen every year since fiscal 2008.
The trust has reserves to cover three years of debt service and has access to revenue from hunting and fishing licenses that are not currently pledged to debt service. There are no additional debt plans.
The bonds were initially insured by XL Capital Assurance, a triple-A municipal bond insurer before the financial crisis. The company changed its name to Syncora Guarantee Inc., which currently is rated Ca with a developing outlook by Moody’s.
