KBRA Affirms A Rating, Stable Outlook on Wise County, TX Lease Revenue Refunding Bonds
5 Apr 2024 | New York
KBRA affirms the long-term A rating with a Stable Outlook on Lease Revenue Refunding Bonds, Series 2021 (“the Bonds”) issued by Wise County, TX. Lease Payments made by Parker County Junior College District (“the District”) from Available Funds secure the Bonds. Available Funds are comprised of 1) the Branch Campus Maintenance Tax (BCMT); 2) any funding received from the State of Texas for operation of a Branch Campus in Wise County; and 3) other income generated by the District at the Branch Campus. Lease Payments are sized and structured to fully cover debt service on the Bonds.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives
- Healthy growth in the County’s net taxable assessed Value (Net TAV) over the last five years (13.6% CAGR).
- Sufficient headroom between the current BCMT tax rate ($0.03250/$100) and the maximum rate ($0.0500) to support future increases, if needed.
- District use of BCMT Revenue is limited to making Lease Payments under the Agreement, with operations and maintenance expenses at the Branch Campus paid after.
Credit Challenges
- Weaker structural protections, including the lack of a rate covenant and a weak Additional Bonds Test (ABT).
- Tax base concentration in oil and gas industries, though the County continues to pursue economic diversification.
Rating Sensitivities
For Upgrade
- A significant and sustained increase in the net TAV resulting in an increase in BCMT Revenue and MADS coverage.
For Downgrade
- While not expected, a significant, sustained economic downturn that sharply reduces Pledged Revenues and MADS coverage.
To access rating and relevant documents, click here.