Standard & Poor's Ratings Services raised its long-term rating and underlying rating on Harris-Montgomery Counties Municipal Utility District No. 386, Texas' general obligation debt one notch to A-minus from BBB-plus.
The outlook is stable.
"The raising of the ratings reflects our assessment of the district's rapidly growing tax base that has led to declines in the MUD's debt-to-assessed value ratios and property tax rate," said Standard & Poor's credit analyst Omar M. Tabani. "Further supporting the upgrade is our view of the district's very strong financial position."
The ratings reflect Standard & Poor's view of the district's: participation in The Woodlands, a master-planned community that has access to the deep and diverse Houston metropolitan statistical area; rapidly growing property tax base; and very strong financial position with healthy reserves.
Constraining the rating is what the rating service considers the district's high, albeit declining, overall net debt burden, coupled with planned new debt issuance.
"The stable outlook reflects our expectation that the district will maintain very strong finances and continue to experience healthy property tax base growth, but that its overall debt-to-assessed value ratios will remain elevated as it continues to issue new debt to fund infrastructure build-out activities," Tabani added. "We could raise the rating if continued property tax base growth outpaces the district's rate of future bonding, leading to continued debt-to-assessed value ratio and property tax rate declines as the district approaches build-out. Conversely, if significant bonding results in higher debt-to-assessed value ratios, we could lower the rating, although we do not consider that scenario likely within the two-year outlook period."
The MUD is located roughly 30 miles north of Houston's central business district.
