DALLAS Texastowns continue to garner upgrades from Standard & Poor'sas they prepare to bring general obligation debt to market.
This reflects a trend seen nationally over the past few months, where the agency has raised the ratings of numerous municipalities and its ratio of upgrades has greatly exceeded the number of downgrades.
In early May, Standard & Poor's said it seeks comparable ratings across sectors and announced plans to "re-benchmark" certain public finance ratios with a higher emphasis on management.
"Most governments exhibiting what might have been historically considered 'standard' credit factors are increasingly prepared to adjust their fiscal positions as economic downturns or cost pressures affect financial stability," analysts said in a report last month.
Standard & Poor's also said its analysis "suggests that a number of governments may have sufficient credit measures to warrant higher ratings."
Upgrades indicate the credit of an issuer is improving and often lead to lower costs of issuance.
On Friday, Standard & Poor'supgraded Abilene, as the West Texas city plans to competitively issue $19.1 million of GO debt in three tranches Thursday. Analysts elevated the credit to AA-plus from AA, citing consistently stable finances.
Abilene will offer $8.7 million of combination tax and revenue certificates of obligation Series 2008A, $8 million of GO bonds, and $2.4 million of Series 2008 combination tax and revenue certificates of obligation. Proceeds will fund improvements to parks, recreation centers, and police- and fire-training centers. The city also plans to use some funds to retrofit existing municipal buildings with more energy-efficient and water-conservation systems.
First SouthwestCo. is financial adviser to Abilene, which is about 150 miles west of Fort Worth, and Fulbright & Jaworski LLP is bond counsel.
Abilene carries an underlying rating of Aa3 from Moody's Investors Service, and Fitch Ratings doesn't rate the credit. The city's population has remained relatively flat the past few years at about 115,000.
Also last week, Standard & Poor's boosted the GO rating of three Texas towns with populations of less than 15,000. In a report in late April, the agency said many smaller issuers "exhibit strong and stable credit quality despite smaller bases."
Fairviewwas raised to A-plus from A as the rural bedroom community 25 miles east of Amarilloin the Texas Panhandle prepares to issue $3.4 million combination tax and limited surplus revenue certificates of obligation this week.
Analysts said the higher rating reflects the town's affluent nature, sound and improving financial position, and expected retail development. The population of the growing city has more than tripled this decade to nearly 8,000 currently.
Fairview's taxable-assessed value has nearly doubled the past five years to $874.9 million this year from $440.7 million in fiscal 2004.
Estrada Hinojosa& Co. is lead manager for this week's negotiated sale. First Southwest is the financial adviser to the town and McCall, Parkhurst & HortonLLP is bond counsel.
Boyd London, managing director at First Southwest, said this week's issue will most likely come to market without insurance.
Moody's rates Fairview's GO debt at A2 while Fitch doesn't rate the credit.
Meantime, Forest Hillreceived an upgrade to A from BBB-plus due to "maintenance of strong reserves and healthy property tax base growth." The town of about 13,000 is 11 miles south of Fort Worth.
Outside Waco in central Texas, suburban Robinsonearned a three-notch upgrade on its GO debt to A-plus from BBB-plus due to a stable financial performance despite steady growth and a "very strong general fund balance" at the end of fiscal 2007.
Analysts said the growing town has averaged 3% annual population growth the past five years to about 9,200.Fitch rates Robinson's GO credit at BBB-plus.
