S&P: Hillsborough County, FL Series 2015 Debt Upgraded To 'AA+' From 'AA' On Application Of Revised Criteria; Outlook Stable

S&P Global Ratings raised its rating on Hillsborough County, Fla.'s series 2015 communications service tax (CST) revenue debt one notch to 'AA+' from 'AA'. The outlook is stable.

"We base the upgrade on the application of our criteria on Issue Credit Ratings Linked To U. S. Public Finance Obligors' Creditworthiness," said S&P Global Ratings credit analyst Jennifer Garza.

(For more information, see the criteria published Jan. 22, 2018, on RatingsDirect.)

At the same time, S&P Global Ratings assigned its 'A-1+' short-term rating to Hillsborough County's capital improvement program series A, series B (AMT), and series C (taxable) commercial paper (CP) notes. The previous A-1 rating on the commercial program reflected The Bank of Tokyo-Mitsubishi letter of credit (LOC) which expires April 16, 2018. S&P Global also affirmed its 'AAA' rating, with a stable outlook, on the county's general obligation (GO) bonds and non-ad valorem revenue debt.

The CP notes are secured by the county's non-ad valorem revenues. The notes will finance capital improvements with a total program authorization of $275,541,016.61. Liquidity support is provided by MUFG Union Bank N. A through a revolving credit agreement, which extends to April 2, 2021. The term of the notes shall not exceed 270 days after issuance, with a maximum maturity date of April 2, 2021. U. S. Bank N. A. is the paying agent whereas Citigroup and MUFG are the co-dealers. The agreements include several actions that are considered events of default, some of which would trigger an automatic termination of the revolving credit agreement. An event of default could occur if any of the three rating agencies--S&P Global Ratings, Moody's Investors Service, or Fitch Ratings--lower its GO rating on the city to below investment-grade or withdraw the rating for credit considerations. In addition, an event of default could occur if the county fails to perform and observe any covenant.

Hillsborough County's GO debt is secured by unlimited ad valorem taxes levied on county taxable property. In addition, the county's non-ad valorem debt is secured by an obligation to budget and appropriate non-ad valorem revenues.

The stable outlook reflects our view of Hillsborough's very strong budgetary flexibility that we expect will remain above 30% of expenditures. In addition, given the county's very strong management conditions, we further expect budgetary performance to remain adequate to strong and liquidity to remain at least very strong during the two-year outlook period.

Should the county's very strong liquidity position deteriorate to a position such that the contingent liabilities identified are not adequately mitigated, we could lower the rating.
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