Moody’s Investors Service upgraded to A3 from Baa1 the underlying rating on the Paris, Tex., Economic Development Corp.’s $2.76 million of outstanding sales tax revenue bonds.
The bonds are secured by the pledged revenues received by the EDC, including the receipts from a sales tax levied for the benefit of the agency.
Analysts said the A3 rating reflects a dedicated sales tax for economic development, continued growth in the EDC’s sales tax revenue that provides solid debt-service coverage, and the credit fundamentals of the city of Paris, most notably a stable local economy. The city’s general obligation rating is A2.
The bonds are special obligations of the corporation, payable solely from and secured only by a lien on and pledged revenue that includes gross proceeds of a one-quarter of 1% sales and use tax collected within Paris for the benefit of the EDC.
The dedicated sales tax levy was approved at an election held in the city in May 1993. The bonds were used to refund a bank loan of the corporation, the proceeds of which were loaned to Paris Packaging Inc. for a portion of the $17 million purchase price of Precision Printing and Packaging, according to Moody’s analysts.