Standard & Poor's Ratings Services said it raised its school issuer credit rating (ICR) on Natalia Independent School District, Texas' general obligation debt one notch to A-plus from A.
The outlook is stable.
The upgrade reflects Standard & Poor's assessment of the district's strengthened financial performance, indicated by an increase in operating reserves.
The rating service also affirmed its AAA program rating, with a stable outlook, on the district's GO debt issued under the Texas Permanent School Fund guarantee program and the district's GO debt not issued under the program.
"We believe management will likely maintain its very strong finances," said Standard & Poor's credit analyst Emmanuelle Lawrence. "While we do not expect to adjust the rating within the outlook's two-year period, substantial reserve deterioration, therefore weakening finances, could place negative pressure on the rating. We believe the district's ability to exhibit a largely stable financial trend will be key to its maintaining the rating."
The program rating reflects Standard & Poor's assessment of the district's eligibility for, and participation in, the Texas Permanent School Fund bond guarantee program, which provides the security of a permanent fund of assets the district can use to meet debt service on program-guaranteed bonds.
The ICR also reflects the rating service's opinion of the district's: access to the San Antonio metropolitan area, providing residents access to employment opportunities; strengthened and very strong financial performance; and low debt with limited additional capital needs.
Standard & Poor's believes these factors are somewhat offset by, what it considers, the district's: somewhat limited, agriculturally focused economy; below-average wealth and income; and limited operating revenue-raising flexibility since the operations and maintenance property tax rate is at the state-mandated maximum of $1.17.
The district's unlimited ad valorem tax pledge secures the bonds.
