Fitch Rates Lubbock, Texas’s $66.9MM COs ‘AA’; Stable Outlook
Fitch assigns its ‘AA’ rating to Lubbock, TX’s $66.9 million tax and wastewater system surplus revenue certificates of obligation (COs), series 2008, scheduled to sell via negotiation on Jan. 16 through a syndicate led by Morgan Keegan & Company, Inc. Fitch also affirms its ‘AA’ rating on the city’s outstanding debt comprising $185.8 million general obligation bonds and $338.1 million COs. The Rating Outlook is Stable.
The COs are direct obligations of the city and are payable from a direct annual ad valorem tax levied, limited to $2.50 per $100 assessed valuation, against all taxable property within the city. The COs are additionally payable from a pledge of surplus net revenues of the city’s wastewater system. The CO proceeds will be used for wastewater system improvements and to pay the costs of issuance.
The ‘AA’ rating reflects the city’s restoration of solid financial reserves, the prevailing health and stability of the local economy, and the moderate direct tax-supported debt burden on city residents. Also considered in the rating is the city’s relationship with its electric utility, Lubbock Power and Light (LP&L revenue bonds rated ‘BBB+’ with a Stable Rating Outlook by Fitch), the financial posture of which has improved, minimizing its potential impact on the city’s general fund operations.