Standard & Poor's Ratings Services raised its long-term rating and underlying rating (SPUR) to AA from AA-minus on Dexter, Mich.'s general obligation bonds.
At the same time, it assigned a AA long-term rating to Dexter's series 2015 GO downtown development refunding bonds. The outlook is stable.
"The upgrade reflects improved budgetary flexibility due to strong budgetary performance," said Standard & Poor's credit analyst Errol Arne.
A pledge of the city's full-faith-credit-and-resources and an agreement to levy ad valorem property taxes within state limitations secure the bonds. For series 2015, the city will pledge tax increment revenues to pay debt service. The rating is based on the city's full-faith-credit-and-resource GO pledge.
It is the agency's understanding that officials will use bond proceeds to refund the series 2008A limited-tax GO downtown development bonds for interest cost savings only.
The stable outlook reflects the view that the city will maintain its very strong budget flexibility and liquidity profile. It does not expect to revise the rating within the two-year outlook period but if the budgetary performance or debt profile deteriorates to a level it feels is weak or very weak, the rating could be pressured.
Consideration for a higher rating would need improvement in the debt profile to a level it feels is at least adequate and improvement in the economy to a level it considers very strong, which it feels is unlikely during the two-year outlook period.
