Standard & Poor's Ratings Services said it lowered its rating to BBB-minus from BBB-plus on Parkway Utility District, Texas' existing general obligation debt.
At the same time, Standard & Poor's assigned its BBB-minus long-term rating to the district's series 2012 waterworks and sewer system combination unlimited tax and revenue refunding bonds. The outlook on all ratings is stable.
"The lowered rating reflects our view of the district's four consecutive years of operating deficits, coupled with its $40 million decline in taxable assessed value, resulting in an increase in the district's overall debt burden to levels that are no longer commensurate with a BBB-plus rated credit," said Standard & Poor's credit analyst Todd Helman. "Further constraining the rating is our view of the district's high overall net burden and backloaded amortization," Helman added.
Officials plan to use the series 2012 bond proceeds to reimburse the developer and general fund for capital improvements as well as refund a portion of the district's outstanding debt for savings.