Moody’s Investors Service last week upgraded to Aa3 from A1 its rating on Rapid City, S.D.’s sales tax revenue bonds as the city prepares to come to market.
The upgrade affects $39.5 million of debt. Rapid City is expected to price $22.7 million of sales tax revenue bonds this week.
“The Aa3 sales tax rating reflects the broad base of the city’s sales tax, solid debt-service coverage levels, and stable revenue trends,” Moody’s said in a press release on the upgrade.
The stable outlook on the city’s sales tax bonds reflects relatively stable revenue trends that will likely result in consistent coverage levels, Moody’s said.
A decline in revenue that leads to thinning debt-service coverage could mean a downgrade, analysts said.
Proceeds will be used for capital improvements, including water and sewer projects.
Moody’s also assigned an issuer rating of Aa3 to the city, home of the Mt. Rushmore National Monument. The rating reflects the city’s strong tax base, healthy general fund reserves and manageable debt, according to Moody’s.