Moody's Lifts Houston Stadium Builder Out of Junk

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DALLAS — The Harris County Houston Sports Authority enjoys investment-grade ratings on all of its debt after upgrades from Moody's Investors Service.

The Moody's upgrades follow settlement of a legal dispute with bond insurance firm National Public Finance Guarantee and a restructuring of debt in December.

Moody's raised the rating on $145 million of senior-lien bonds to A2 from Ba3. The rating on $123 million of junior-lien bonds rose to Baa2 from B2, while the $58 million of third-lien bonds climbed to Baa3 from B3.

The senior-lien bonds will be redeemed Jan. 28 as part of the recent debt restructuring.

"This action concludes the review for possible downgrade initiated Oct. 28, 2014," Moody's analysts John Medina wrote in the Jan. 22 report.

"The stable outlook reflects our view the pledged revenues will continue to perform well and yield sound debt service coverage ratios due to the flattening out of the debt service schedule for the senior and second lien bonds post the recent debt refinancing," he wrote.

The authority refunded $558 million of bonds Dec. 10 after years of being sidelined by junk-bond ratings.

The restructuring was also eased by the payoff of $125 million of 2009 variable-rate debt that became bank bonds held by JPMorgan after a downgrade of National, then known as MBIA Inc. The bonds were paid off in the spring of 2014.

Standard & Poor's issued ratings of A-minus on the authority's senior refunding bonds Oct. 29. The second-lien bonds were rated BBB. Outlooks are stable.

National and the HCSA were locked in litigation over how the authority's coverage ratios on more than $1 billion of insured debt. The two parties announced a settlement in October 2014.

The sports authority was created in 1997 to build major-league ballparks in Houston, including Minute Maid Park, home to Major League Baseball's Houston Astros, NRG Stadium, home to the National Football League's Houston Texans, the Toyota Center, home to the National Basketball Association's Houston Rockets, and BBVA Compass Stadium, home to Major League Soccer's Houston Dynamo.

The authority issued several series of bonds in 1998 and 2001 to fund the construction of Minute Maid Park, NRG Stadium, and Toyota Center. The authority receives countywide taxes that consist of a 2% hotel occupancy and tax and a 5% motor vehicle rental tax.

The taxes, along with $4.6 million in annual lease payments from the Houston Astros, are part of the trust estate securing a portion of the authority's debt.

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