Fitch Ratings upgraded to A from A-minus the Bi-State Development Agency of the Missouri-Illinois Metropolitan District’s 2002 and 2007 debt due to its improved financial condition, helped by the passage of a sale-tax rate hike.
The upgrade affects $321 million of mass-transit sales tax appropriation bonds from a 2002 issue and $21 million of refunding bonds from a 2007 issue.
Fitch previously had assigned a negative outlook to the credit, but has revised the outlook to stable. “The upgrade reflects the agency’s significantly enhanced financial flexibility due to the passage of a sales tax increase, coupled with the agency’s reduced exposure to potentially adverse contingent liabilities,” analysts wrote.
In addition to its improved fiscal condition, the development agency expects to increase its debt-service coverage ratios through a debt reduction plan that calls for it to accelerate repayment in fiscal 2013. Coverage has declined due to lower sales-tax collections but is projected to remain acceptable.
The agency’s senior-lien bonds are secured by an annual appropriation by St. Louis and St. Louis County of their respective collection of revenue that comes from a quarter-cent sales tax.
Last April, St. Louis County voters passed by a 63% margin a half-cent sales tax hike to restore transit service and fund future expansion. The favorable vote also triggered a quarter-cent sales tax increase in the city. The hikes are expected to raise an additional $83 million in fiscal 2012.