NEW YORK - Moody's Investors Service said it has upgraded to Aaa from Aa1 the ratings assigned to $1.7 billion of outstanding Texas Workface Commission's unemployment compensation obligation revenue bonds, issued through the Texas Public Finance Authority (TPFA).

The bonds, secured by special assessments levied on all employers in the state, were issued in December 2010 to repay federal unemployment trust fund advances at a lower interest cost than the rate the federal government would have begun charging in 2011 and to add funds to the state's unemployment trust fund.

The upgrade reflects Moody's evolving view of the credit structure that includes Texas' notably broad $88.4 billion taxable wage base on which the obligation assessments are levied; a 1.5 times rate covenant; segregation of the pledged revenues from the state's general fund; requirement that excess revenues be used to defease bonds early; state nonimpairment covenant; and the high rate of payment compliance by employers and the commission's strong legal enforcement mechanisms. The outlook is stable.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.