Standard & Poor's Ratings Services said it lowered its long-term rating on Garza County Public Finance Corp., Texas' outstanding revenue debt to BBB from BBB-plus.
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The outlook on all debt is stable.
"The downgrade reflects our view that there is increasingly more risk with these types of prison bonds," said Standard & Poor's credit analyst Ed McGlade.
As the contract with the Federal Bureau of Prisons terms out in 2017, as the industry standard is now shorter one-year contracts, and as recent events have caused government agencies to finally begin to terminate these types of contract, the agency said it felt that there is increasing risk for contract renewals and, therefore, the lower rating.
