Bangkok--3 Feb--Standard & Poor's
Standard & Poor's Ratings Services raised its rating and underlying rating (SPUR) to 'AA' from 'AA-' on Surprise Municipal Property Corp. (MPC), Ariz.'s excise tax bonds, series 2000. In addition, Standard & Poor's assigned its 'AA' rating and SPUR to the city's series previously issued 2003 MPC excise tax bonds. The outlook is stable.
"The ratings reflects growth in the city's economic base, continued very strong coverage of 16x, and no additional bonding plans, which should allow for continued high coverage ratios despite recent and projected declines in pledged revenues," said Standard & Poor's credit analyst Paul Dyson. These strengths are offset somewhat by an 8% decline in pledged revenues to $76 million in fiscal 2008 from $83 million in fiscal 2007. Moreover, city data for the first six months of fiscal 2009 indicate pledged revenues are trailing fiscal 2008 totals by approximately 13%.
Population growth has been extremely rapid and is currently estimated at 104,895. According to the city, as population levels eclipse the 100,000 threshold, retailers' interest in doing business within the city strengthens. The city now has its first movie theater complex, a second Kohl's store recently opened, and a second Target and Wal-Mart are also slated to open soon. Wealth levels are strong, with median household effective buying income currently at 118% of national levels. Likewise, per capita market value has risen to more than $130,000 given the strong development over the past several years. Unemployment for 2007 was 4.1%, down from 6.5% in 2003.
In total, pledged revenues constituted 93% of general fund revenues in fiscal 2008, reducing the likelihood the city will bond down to its 3.0x additional bonds test. Along these lines, the city has indicated no plans to bond further against these revenue streams for the foreseeable future given the revenues have existing, dedicated uses. The bond covenants also require the city to raise sales tax rates if coverage by pledged revenues of annual debt service falls below 2.5x. The city also has a policy to set aside an entire year's worth of debt service.
Surprise is located just 20 miles northwest of Phoenix within 'AAA'-rated Maricopa County.
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
Edward Sweeney, New York (1) 212-438-6634, [email protected]
Analyst Contacts:
Paul Dyson, San Francisco (1) 415-371-5079
Shannon Groff, San Francisco (1) 415-371-5005
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ [email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]