LOS ANGELES — The Reno-Sparks Indian Colony in Nevada received a Fitch Ratings upgrade bringing its long-term issuer default rating into institutional-grade territory.
The upgrade to BBB from BB-plus reflects “expansion and diversification of the Colony’s tax base over the past eight years,” Fitch said in a May 25 report.
That expansion has contributed to a healthy financial cushion as reflected in fiscal 2014 reserves equal to 96% of spending, analysts wrote.
BBB ratings indicate that capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity, Fitch analysts wrote.
“Despite strong recent conditions and near-term prospects, Fitch believes that the very concentrated nature of the revenue base leaves the RSIC susceptible to a sudden and unpredictable change in profile; this represents an additional risk factor that constrains the rating,” according to the report.
The RSIC is a federally recognized tribe with a reservation consisting of noncontiguous trust land totaling over 2,000 acres in and around downtown Reno within Washoe County.
Revenue performance has been strong and the colony has made ample independent revenue raising strides, according to the report. The colony has no notable spending pressure, strong spending flexibility and a conservative annual budgeting process and carrying costs are low.
The long-term liability burden estimated at about 30% in relation to personal income of residents, is elevated, but still moderate, Fitch wrote.