Opp, AL GO Debt Rating Lowered To 'A-' On Low Available General Fund Balance, Local GO Criteria
DALLAS (Standard & Poor's) Sept. 9, 2014--Standard & Poor's Ratings Services lowered its underlying rating (SPUR) on Opp, Ala.'s general obligation (GO) warrants one notch to 'A-' from 'A'. The outlook is stable. The downgrade reflects Standard & Poor's opinion of the city's low nominal available general fund balance due to recurring deficits and the implementation of Standard & Poor's local GO criteria, published Sept. 12, 2013, on RatingsDirect. "If management cannot close the budget gap, resulting in significant financial deterioration, we could lower the rating further," said Standard & Poor's credit analyst Emmanuelle Lawrence. "We believe it is unlikely we will raise the rating over the next two years due to the city's very weak economic indicators and debt profile." The city's full-faith-and-credit pledge secures the warrants. At the same time, city officials have entered into a loan agreement with Mizell Memorial Hospital, in which the city used warrant proceeds to refund hospital debt outstanding. While the city is pledging its full faith and credit as security for the series 2011A warrants, officials expect payments to the city from the hospital will sufficiently cover debt service. RELATED CRITERIA AND RESEARCH Related Criteria
- USPF Criteria: Local Government GO Ratings Methodology And Assumptions, Sept. 12, 2013
- USPF Criteria: Financial Management Assessment, June 27, 2006
Related Research
- S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency, Sept. 12, 2013
- Institutional Framework Overview: Alabama Local Governments
Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
| Primary Credit Analyst: | Emmanuelle Lawrence, Dallas (1) 214-871-1473; emmanuelle.lawrence@standardandpoors.com |
| Secondary Contact: | Brian J Marshall, Dallas (1) 214-871-1414; brian.marshall@standardandpoors.com |
| Research Contributor: | Sonali Suri, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
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