Standard & Poor’s last week lowered its underlying rating on the Galveston Community College District’s outstanding Series 2004 combined fee revenue and refunding bonds to BBB from BBB-plus and placed the rating on negative CreditWatch.
“The lowered rating and CreditWatch placement are a result from the damage from Hurricane Ike to the local economy and follows the recent downgrade to the city of Galveston,” said analyst Bianca Gaytan-Burrell.
Standard & Poor’s cited the significant loss to the city’s employment base, enrollment, and local tax revenue base as factors affecting the district’s revenues and operations.
The rating agency last month dropped Galveston’s general obligation credit to BBB from A-plus and left it on negative watch, where it was placed on Jan. 12. The agency also lowered the city’s waterworks and sewer bond debt to BBB from A-minus.
Moody’s Investors Service rates the community college debt A3 and has not changed the stable outlook since the storm. The bonds are not rated by Fitch Ratings.
The community college campus suffered little damage when the hurricane hit Sept. 13, but the loss of tax base, employment, and population in the wake of the storm has affected all governments in Galveston County, which includes parts of the mainland.
The college, which was established in 1967, serves the city of Galveston, which is on a 32-square-mile island, two miles off the Gulf Coast and 50 miles southeast of Houston.