Jefferson County, AL Series 2018A And B General Obligation Refunding Warrants Rated #AA-#; Outlook Is Stable

Stocks and Financial Services Press Releases Thursday May 17, 2018 09:19
NEW YORK--17 May--S&P Global Ratings

NEW YORK (S&P Global Ratings) May 16, 2018--S&P Global Ratings has assigned its 'AA-' rating to Jefferson County, Ala.'s series 2018A general obligation (GO) refunding warrants and series 2018B GO refunding warrants (delayed delivery). The outlook is stable. The rating reflects the application of our criteria "Issue Credit Ratings Linked To U.S. Public Finance Obligors' Creditworthiness" (published Jan. 22, 2018, on RatingsDirect). We understand management will use the series 2018A warrant proceeds to refinance portions of the county's series 2003A and 2004A GO warrants, along with redeeming all of the existing series 2006 public building authority (PBA) lease revenue warrants, for debt service savings. The series 2018A warrants will also remove the series 2006 PBA warrants, which held a payment agreement between Ambac and the county (signed in 2012). The series 2018B warrant proceeds will refinance the county's series 2013A and 2013C GO warrants, also for debt service savings. "We believe the refunding of the series 2006 PBA warrants reflects the county's efforts to fully own and support its debt obligations and that by refunding the warrants with a full faith and credit pledge, it further reflects the county's strengthened commitment to its debt going forward," said S&P Global Ratings credit analyst Jim Tchou. Once the series 2018A transaction closes, we will withdraw our 'CCC' rating on the series 2006 PBA lease revenue warrants, supported by the county. For more information on this rating, please see the report published May 31, 2017. On Dec. 3, 2013, Jefferson County officially emerged from bankruptcy following the bankruptcy court's approval of the county's Chapter 9 Plan of Adjustment. The county originally filed for protection from its creditors under Chapter 9 of the U.S. Bankruptcy Code on Nov. 9, 2011. The stable outlook reflects our opinion that the county will maintain its very strong budgetary flexibility and liquidity, supported by strong management. In addition, we believe the county's participation in the Birmingham-Hoover metropolitan statistical area provides additional rating stability. Therefore, we do not expect to change the rating during the two-year outlook period. We could raise the rating if the county significantly improves its debt profile by reducing carrying charges and improving its amortization schedule, in addition to demonstrating its ability to manage its debt service costs and addressing deferred capital projects while continuing to balance operations. We could lower the rating if the county's financial performance deteriorates due to structural imbalance, leading to a significant decline in reserves.


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