DALLAS — Moody’s Investors Service will keep the Aaa rating of Texas’ Alamo Community College District on negative outlook because of its exposure to a weakened U.S. credit profile, the agency said.
The action comes in advance of a $71.5 million refunding of tax-backed bonds.
Moody’s analyst Adebola Kushimo attributed the negative outlook to “indirect linkages to the weakened credit profile of the U.S. government.” The negative outlook stems from Moody’s decision in August to assign a negative outlook to the U.S. government’s Aaa rating.
Standard & Poor’s, which last year downgraded U.S. debt to AA-plus from AAA, rates the Alamo Community College bonds AA-plus with a stable outlook.
“Moody’s has determined that issuers with indirect linkages, such as Alamo Community College District, have some combination of economies that are highly dependent on federal employment and spending, a significant healthcare presence in their economies, have direct healthcare operations, or high levels of short-term and puttable debt,” Kushimo wrote.
San Antonio is home to the Ft. Sam Houston Army post, Brooke Army Hospital, and Lackland and Randolph Air Force bases. The threat of a Moody’s downgrade of U.S. debt increased when Republican congressional leaders vowed to create another showdown over the federal debt ceiling.
Standard & Poor’s downgraded the United States after Congress considered forcing a default on federal debt by refusing to raise the debt ceiling.
With a 2011 enrollment of 97,606, Alamo Community College carries a direct debt burden of 0.5%. After next week’s deal, parity general obligation debt is $540.5 million, according to Moody’s.
The district is expected to remain the lead workforce training provider for the region, creating on-the-job training for students, and serving as an academic model in partnerships with neighboring colleges, Moody’s wrote.