Portland, MI 2008 GO Bond Rating Lowered To 'A+' On Declining Reserves
NEW YORK (S&P Global Ratings) Aug. 29, 2019--S&P Global Ratings lowered its long-term rating to 'A+' from 'AA-' on Portland, Mich.'s series 2008 general obligation (GO) bonds. The outlook is stable.
"The rating change reflects our opinion that the city's available reserves over the past few years have fallen to a level that we no longer consider comparable to those of similarly rated peers," said S&P Global Ratings credit analyst Errol Arne, "and in addition, our assessment of the city's management profile has changed, which also contributed to the downgrade."
The series 2008 bonds are secured by the full faith and credit and an agreement to levy ad valorem property taxes within state limitations. We rate the limited-tax GO debt at the same level as our view of the city's general creditworthiness, given that ad valorem taxes are collected from the city's entire tax base and because of a lack of limitations on the fungibility of resources available for debt service. The intended sources for paying debt service on the 2008 bonds are electric fee revenues and these revenues have been sufficient to do so.
"The stable outlook reflects our opinion that Portland will make the necessary adjustments to maintain available reserves at a level we feel is comparable with the current rating," added Mr. Arne. We do not expect the rating to change over the two-year outlook period.
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