Standard & Poor's Ratings Services said it raised its rating on Kaufman County Municipal Utility District No. 11, Texas' general obligation debt one notch to BBB from BBB-minus.
The outlook is stable.
The raising of the rating reflects Standard & Poor's opinion of the district's growing property tax base that has led to a declining debt-to-assessed value ratio.
The rating reflects Standard & Poor's opinion of the district's: access to Dallas' deep and diverse economy; steadily growing property tax base; and good liquidity for debt service, provided by a debt service fund.
Constraining the rating is Standard & Poor's view of the district's: low general fund reserves and high, albeit declining, overall debt burden, with additional growth-related capital needs.
"The stable outlook reflects our expectation that the district's property tax base growth will continue, but that its overall debt-to-assessed value ratio will remain high as it issues new debt to fund infrastructure build-out," said Standard & Poor's credit analyst Omar M. Tabani. "If continued property tax base growth fosters a scenario of additional debt issuance amid simultaneous debt-to-assessed value ratio declines, and if the district can also maintain, if not improve, its currently low general fund reserves, we could raise the rating. Conversely, we could lower the rating if new bonding significantly outpaces future district property tax base growth, or the district's financial position deteriorates, but we do not consider those scenarios likely within the two-year outlook period."
Kaufman County Municipal Utility District No. 11 is located about 18 miles east of Dallas.
