S&P: Canadian County Educational Facilities Authority, OK Lease Revenue Rating Raised To 'A' On Increased Available Reserves
The rating action reflects S&P Global Ratings' opinion of the district's increased available reserves for fiscal 2015 and projections for fiscal 2016 that indicate further reserve growth after continued property tax base growth.
"We do not expect to change the rating during the outlook's two-year period. However, if economic expansion were to result in materially reduced tax base concentration, assuming all other rating factors remain stable or improve, we could raise the rating," said S&P Global Ratings credit analyst Stephen Doyle. "If the tax base were to depreciate significantly, straining the budget and materially deteriorating available fund balance, we could lower the rating."
The stable outlook reflects S&P Global Ratings' opinion that the district will likely maintain its very strong finances, independent of state aid, through the support of tax base growth. The rating service believes a lack of additional debt needs provides additional rating stability.
Annual lease payments to the authority from the district, subject to annual appropriation, secure the bonds. S&P Global Ratings understands officials plan to issue general obligation (GO) bonds annually to make the required lease-rental payments to the authority. The rating service, however, recognizes officials have not pledged GO bond proceeds as security for the lease revenue bonds. S&P Global Ratings views market risk as low. Furthermore, the district's ability to make lease-purchase payments from GO bond proceeds deposited into the bond fund is contingent on the issuance of said bonds. In case of late-budget adoption, the district encumbers a portion of the annual budget, which S&P Global Ratings understands management can use for semiannual lease payments if the district were to deem it necessary.