S&P: Fairfield, IL GO Debt Rating Raised To 'A-' On Improved Budgetary Performance And Flexibility
"The upgrade reflects the city's improved budgetary performance and flexibility," said S&P Global Ratings credit analyst Eric Harper.
The series 2016 bonds are secured by net revenues of Fairfield's water and sewer system and its share of state sales taxes. They are also secured by an unlimited debt service levy to the extent that pledged revenues are insufficient to cover debt service. Since, in our view, the GO pledge including the debt service levy is stronger than the other security pledge, we rated to the GO. We understand the city will annually abate the debt service property tax levy on a covered basis only on full funding of the bond fund. The bonds will be used to partially refund the city's 2008 GO bonds and Illinois Environmental Protection Agency loans.
Fairfield, with an estimated population of 5,061, is the Wayne County seat and is in southeastern Illinois.
"The stable outlook reflects our expectation that Fairfield will maintain its adequate budgetary performance and very strong budgetary flexibility and liquidity," added Mr. Harper. We do not expect a rating change within the two-year outlook period.
A positive rating action would require sustained and improved budgetary performance, more formalized financial management policies, and moderating of the city's large pension obligations. Conversely, if the city's budgetary flexibility and performance were to deteriorate to a level we no longer considered commensurate with the rating level, we could lower the rating.