Bangkok--4 Sep--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AA' long-term rating, with a stable outlook, to Nogales Municipal Development Authority, Ariz.'s $13.53 million municipal facilities revenue bonds, issued on behalf of the city of Nogales.
The rating reflects the city's very strong coverage of maximum annual debt service of 6.2x in fiscal 2009, projected at no less than 6.1x through 2014; strong sales tax base, per capita retail sales, and historical trends supported by the city's role as the county and regional commercial retail center; more important role as one of the busiest U.S.-Mexico border crossings and largest port of entry in the state; and strong legal provisions with a 2.5x additional bonds test and rate covenant.
These strengths are offset slightly by our view of a concentrated local sales tax base; a recent softening of pledged revenues given the downturn in the national and local economy; the city's moderate reliance on visitors from Mexico to generate sales tax revenues, and the city's low income levels.
Security for the bonds is provided by lease-rental payments secured by all city-collected excise taxes, including those for transaction privileges and state-shared sales, as well as other revenues.
"We expect continued strong debt service coverage even without reliance on growth in pledged revenues," said Standard & Poor's credit analyst Paul Dyson. "We also believe that area economic growth and diversification will continue, and the city's proximity to Mexico will continue to provide stability in sales tax revenues, especially given the upcoming port expansion."
Located 65 miles directly south of Tucson in Santa Cruz County, which has a population of 47,471, the county seat and city of Nogales has a population of 21,709. The city serves as a key retail and trade center for southern Arizona, and as a very active regional commercial trade center with Mexico. Growth in the community continues to be primarily fueled by agricultural trade, retail, and services.
RELATED RESEARCH
USPF Criteria: "Special Tax Bonds," June 13, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Paul Dyson, San Francisco (1) 415-371-5079
Ian Carroll, San Francisco (1) 415-371-5060
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ [email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]