Standard & Poor's Ratings Services said it raised its long term rating and underlying rating by one notch to A-minus from BBB-plus on Paseo Del Este Municipal Utility District No. 10, Texas' outstanding obligation bonds.
The outlook is stable.
"The raised rating reflects the district's continued property tax base growth, limited near-term bonding plans, and maintenance of overall debt-to-assessed value (AV) ratios in line with an A-minus rated credit," said Standard & Poor's credit analyst Omar Tabani.
At the same time Standard & Poor's assigned its A-minus long-term rating, and stable outlook, to districts series 2013 unlimited-tax bonds.
The rating reflects the district's: participation in the Paseo del Este master-planned community; growing property tax base; limited near-term debt-supported capital needs; and very strong financial position.
The rating is constrained by the district's moderately high overall debt burden.
The bonds are secured by an unlimited ad-valorem tax levied on all taxable property in the district. Bond proceeds will be used to fund developer reimbursements.
Paseo del Este MUD No. 10 is in El Paso County, approximately 17 miles east of El Paso. The district is one of 11 participant districts in the master-planned community of Paseo del Este, which spans over 4,300 acres and includes over 2,000 homes. MUD No. 10 encompasses 414 acres and, as of May 2013, contained 845 completed single-family homes and 57 homes under construction.
"The stable outlook reflects the expectation that the district's limited near-term capital needs will allow for a gradual reduction of its debt-to-AV ratios as property tax base growth continues," added Tabani, "albeit at a slower pace than over the past few years." It also reflects the expectation that the district will issue the remainder of its $5.01 million authorization over the medium-to-long term to develop the remaining 100 acres, but that additional tax base growth associated with the development of that land will allow the debt to be issued without materially increasing its debt-to-AV ratios.
