Orange County, N.C. Wins Triple-A From S&P

Standard & Poor's bumped Orange County, N.C.'s general obligation rating up a notch last week to gilt-edge AAA.

The higher rating applies to about $103.5 million of outstanding GO debt. The outlook is stable.

S&P also raised its rating on the county's appropriation-backed debt one notch to AA-plus from AA.

The upgrades reflect S&P's assessment of the county's ability to address its capital needs while consistently maintaining "sound operations and strong finances," according to analyst Linda Yip.

The AAA rating was also assigned to the county's upcoming sale of $13.7 million of GO refunding bonds.

"We believe the strength and stability of the local economy will likely continue to support the county's sound operations and strong fund balance," Yip said. "Despite the issuance of additional debt over the next five years, we believe that due to what we consider the county's low debt and rapid debt amortization overall debt will likely be manageable."

Yip said the rating could be lowered if capital or other budgetary pressure resulted in significant general fund balance deterioration. An additional $115 million of new tax-supported debt could be issued over the next five years to fund ongoing capital needs for both the county and its school districts.

The county has consistently demonstrated strong operations over the past few years with consecutive operating surpluses contributing to a growing general fund balance, S&P said.

Orange County is located in north-central North Carolina, in the Raleigh/Durham/Chapel Hill Metropolitan Statistical Area, which includes the Research Triangle Park, a major complex of research and research-oriented manufacturing facilities.

Property taxes generated 74% of fiscal 2012 revenue, according to S&P.

The county balanced its fiscal 2013 general fund budget with a $2.2 million fund balance appropriation, but expects to end the year with another surplus, Yip said.

S&P said the county's stable and diverse economy is anchored in education and health care services. It also has a stable property tax base, good income levels, and low overall net debt.

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North Carolina
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