Cowboys Stadium Debt Gets S&P Upgrade to A-plus

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DALLAS — Arlington, Texas, won a one-notch Standard & Poor's upgrade to A-plus on revenue bonds used to build the Dallas Cowboys' AT&T Stadium as the city appears headed toward early retirement of the debt.

"The upgrade reflects the ratings service's view of ongoing pledged revenue growth and improved debt service coverage in recent years," analysts Omar Tabani and Brian Marshall said Sept. 2.

"If material pledged revenue increases or early debt retirement results in substantially improved debt service coverage, we could further raise the rating," Tabani said.

Higher than expected revenues have put Arlington on pace to pay off the 30-year bonds 10 years earlier than expected, according to city officials.

Arlington issued $298 million of revenue bonds 10 years ago. As of this year, Arlington has paid $258.6 million or 40% of the debt.

Revenue from a 0.5% citywide sales tax, a 2% citywide hotel occupancy tax, and a 5% citywide short-term motor vehicle rental tax secures the bonds.

Earlier this year, the city paid the last of a $64 million lump-sum payment that wasn't due until 2035, city officials said. That officially shaved seven years off the 30-year bonds' debt-service schedule.

In 2009, the year the stadium opened, Arlington refunded $164 million of Series 2005B bonds that were originally sold as variable-rate demand notes supported by a standby bond purchase agreement and hedged with an interest rate swap. The 2009 issue ended the 2005B swap and shifted all the debt into fixed rate.

In 2008, the city retired $104 million of the original $164 million in 2005B bonds after some became bank bonds held by liquidity provider, Depfa Bank PLC. The rest were remarketed in February 2009.

Moody's Investors Service rates the debt A1 with a stable outlook.

Located in Tarrant County halfway between Dallas and Fort Worth, Arlington has seen its population grow to 381,300. The city is also home to Major League Baseball's Texas Rangers and the Six Flags Over Texas amusement park. A General Motors truck plant is one of the city's major employers.

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