Moody's Investors Service said it  has downgraded Santa Fe County, N.M.'s county gross receipts tax rating to Aa2 from Aa1 and capital outlay gross receipts tax rating to Aa3 from Aa1 affecting $26.8 million and $38.8 million in rated debt outstanding, respectively.

The outlook on the county's debt profile has been revised to stable.

The County GRT bonds are secured by three sources (1) the first 1/8% County GRT, (2) the third 1/8% County GRT, and (3) the 1/16 County GRT, and the Capital Outlay GRT bonds are secured by 37.5% of the 0.25% Capital Outlay GRT revenues.

The downgrade of the County GRT bonds to Aa2 primarily reflects the demonstrated volatility of the pledged sales tax revenues, particularly in the most recent downturn, when revenues and debt service coverage fell below levels consistent with a Aa1 rating.

The rating also reflects a weak 1.4 times additional bonds test and an average springing debt service reserve required only if coverage falls below 2.0 times and funded over a 24 month period.

The downgrade of the Capital Outlay GRT bonds to Aa3 also reflects the volatility of the revenue stream but takes into consideration weaker legal provisions than the County GRT including a 1.5 times additional bonds test and a 1.25 times springing debt service reserve.

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