Moody's Investors Service said it has downgraded to A1 from Aa3, the rating on Sugar Land Development Corporation, Texas's, revenue debt.
At the same time, it assigned an A1 to $39.5 million sales tax revenue bonds, series 2014. Proceeds from the sale of the bonds will be used to construct a new performing arts center, plaza, and parking facilities.
The bonds are secured by a first lien on the pledged revenues including ¼ of 1% sales and use tax levied within the cty of Sugar Land.
The downgrade reflects a significantly weakened debt service coverage position, as well as high leverage as the corporation triple's its debt.
The A1 rating continues to reflect a history of relatively stable pledged revenues with only one year of decline noted over the past decade, and somewhat weak legal provisions. The rating also takes into consideration the broad nature of the sales tax pledge.
