Texas Border County Gets Upgrade as Economic Pace Quickens

DALLAS – Webb County, Tex., which includes Laredo on the Texas-Mexico border, earned a Standard & Poor’s upgrade to AA from AA-minus in advance of a $21.9 million issue of certificates of obligation.

"The raised rating is based on our view of the county's continued economic growth and diversification, as well as its maintenance of a very strong financial position," said S&P analyst Kate Choban. The outlook is stable.

"Further strengthening the rating is our view of the county's moderate overall debt levels and rapid amortization of principal," she said.

The bonds will be used to refund portions of the County's outstanding 2003 and 2006 bonds for an estimated net present value savings of 8.0% with no extension of final maturity.

While Fitch Ratings maintained its AA-minus rating with a stable outlook, “the county's economic profile generally mirrors that of the City of Laredo (GO bonds rated 'AA' with a Stable Outlook by Fitch), which accounts for about 90% of the county's population,” wrote analyst Rebecca C. Moses.

Moody’s Investors Service rates the county’s general obligation debt at Aa3 with no outlook.

As the gateway to the U.S. on Interstate 35, Laredo ranks as one of the largest inland border ports of entry in the U.S.  With dramatic increases in production of oil and gas from the Eagle Ford Shale formation to the north, Webb County has seen another engine of growth as construction and transportation in South Texas has surged.

The county’s estimated 2011 population of 257,000 reflected a nearly 3% average annual gain from 2000 census levels, analysts said.

Despite the economic activity, the county, like most on the border, includes large swaths of poverty.

“Area wealth levels are well below state and national averages, but are mitigated in part by the relatively low cost of living,” Fitch noted.

For reprint and licensing requests for this article, click here.
Texas
MORE FROM BOND BUYER