St. Joseph County received an upgrade and a downgrade from rating agencies last week — bringing the rating on its limited-tax bonds in alignment at the high single-A level — in advance of $5.3 million of limited-tax bridge refunding bonds the county is planning to sell this week.

Located in north-central Indiana, the county is home to the University of Notre Dame, which acts as an anchor to the area, analysts said. Exposure to the weak automotive industry has led to an 11% unemployment rate.

Standard & Poor’s upgraded the rating to A-plus from A on the county’s debt as well as debt issued by the St. Joseph County Jail Building Corp. and by the St. Joseph County Redevelopment District.

The upgrade, which affects just under $38 million of debt, is based in part on a diverse economy that is anchored by Notre Dame as well as the health care industry, credit analyst Scott Garrigan said in a release. 

“We expect that the county will be able to maintain structural balance and reserve levels that we consider at least adequate,” he wrote.

Standard & Poor’s maintains a stable outlook on the county’s debt.

Fitch Ratings also assigned an A-plus rating to the $5.3 million of limited-tax bridge refunding bonds and downgraded the county’s other limited-tax bridge fund bonds to A-plus from AA-minus.

At the same time Fitch dropped St. Joseph County’s unlimited-tax general obligation debt to AA-minus from AA. The downgrade is due in part to the effect of property tax reforms, including so-called circuit breakers that limit the amount property tax bills can rise, which were implemented statewide in Indiana last year.

The outlook remains negative for all the debt.

Recent legislation requires that debt service be fully funded regardless of the affect of property tax reform on local property taxes.

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