S&P: New Boston, TX GO Rating Outlook Revised To Positive On Possible Rating Increase During The Next Two Years
The rating action reflects S&P Global Ratings' opinion that there is at least a one-in-three chance it could raise the rating within its two-year outlook period if available general fund balance for fiscal 2016 were to increase to a level greater than $500,000, a level the rating service no longer considers nominally low, and if management were to maintain available fund balance above $500,000 due to strong budgetary performance and proactive management.
At the same time, S&P Global Ratings assigned its 'A' long-term rating and positive outlook to the city's $2.9 million series 2016 combination tax and revenue certificates of obligation and affirmed its 'A' SPUR on the city's existing GO debt.
"We think we could raise the rating within two years if available general fund balance for fiscal 2016 were to increase to a level greater than $500,000, which we no longer consider nominally low, and if management were to maintain available fund balance above $500,000 due to strong budgetary performance and proactive management," said S&P Global Ratings credit analyst Stephen Doyle. "If available reserves were to remain below $500,000, a level we consider nominally low, we could revise the outlook to stable."
Officials intend to use series 2016 GO bond proceeds to fund various capital projects.
An ad valorem tax levied within the limits prescribed by law on all taxable property within the city secures the bonds. The certificates are payable from the same limited tax and net surplus revenue of the city's waterworks and sewer system. However, the rating service rates the bonds based on the city's ad valorem tax pledge.