Moody's Investors Service Tuesday upgraded the Southwest Virginia Regional Jail Authority's rating to A1 from A2.
The upgrade affects $53 million of outstanding revenue debt. Moody's also assigned an A1 issuer rating to the authority.
"The upgrade to A1 reflects the improved credit quality of most of the authority's member jurisdictions, satisfactory legal provisions provided by the service agreement and master trust indenture, as well as commonwealth of Virginia's history of support for regional jail authorities," Moody's said.
Standard & Poor's on Tuesday also assigned its A-minus issuer credit rating to the authority, and affirmed its A-minus underlying rating on the authority's jail facilities revenue bonds.
S&P said the outlook is stable.
The authority's bonds are secured by net revenues and other funds derived from operations, though the primary revenue source comes from the payments of 10 member jurisdictions.
The authority's jails are operating at 185% of the rated capacity of 896 inmates so it is preparing to expand and renovate facilities to increase capacity to 1,408, according to S&P.
The project is estimated to cost $34.2 million and the authority will receive a 50% reimbursement from the commonwealth.
"We understand the authority intends to finance its share of the project with $18 million in revenue bonds to be issued through the Virginia Resources Authority in spring 2013," S&P said. "The authority will also issue $17.2 million in grant anticipation notes, which will be paid when commonwealth reimbursement funds are received in fiscal 2016 after completion of the project."
The authority is also planning to refund its Series 2003 bonds for debt service savings through the VRA.