Fitch Upgrades San Bernardino County Trans Auth, CA's Sales Tax Revs to 'AAA'; Stable Outlook.
ENPNewswire-January 28, 2022--Fitch Upgrades San Bernardino County Trans Auth, CA's Sales Tax Revs to 'AAA'; Stable Outlook
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Release date- 27012022 - Fitch Ratings assigns an 'AAA' to $58,515,000 sales tax revenue refunding bonds (limited tax bonds) 2022 series A to be issued by the San Bernardino County Transportation Authority (authority), California.
In addition, Fitch Ratings upgrades the following authority bonds to 'AAA' from 'AA+':
$76,650,000 sales tax revenue bonds (limited tax bonds) 2012 series A (to be refunded);
$102,135,000 sales tax revenue bonds (limited tax bonds) 2014 series A.
The Rating Outlook is Stable.
The bonds are expected to price via negotiation the week of Feb. 14, 2022. Proceeds will be used to refinance the authority's outstanding 2012 series A sales tax revenue bonds for debt service savings.
SECURITY
The bonds are secured by a first lien pledge of the authority's sales tax revenues, net of collection charges. The sales tax revenues derive solely from the voter-approved one-half cent Measure I sales tax to be collected through 2040.
ANALYTICAL CONCLUSION
The upgrade of the sales tax revenue bonds to 'AAA' from 'AA+' reflects limited and quantified additional leverage plans (supported by satisfactory legal limitations on additional leverage), which results in a very strong debt service cushion from current revenues, relative to historical revenue volatility. The 'AAA' rating also reflects the structure's ample resilience to typical cyclical stresses, and the strong local economy and revenue growth prospects.
KEY RATING DRIVERS
STRONG GROWTH PROSPECTS: Fitch views growth prospects for pledged revenues as strong reflecting consistent population and employment growth in San Bernardino County, as well as shifts to remote working and the accelerated growth in online shopping and related warehousing. The regional economy's growth is supported by its relative affordability compared to coastal areas and abundant developable land.
RESILIENT REVENUE STREAM: Pledged sales tax revenues are highly resilient to both cyclical declines and the return of historic volatility. Fiscal 2021 revenues cover maximum annual debt service (MADS) for existing debt by 16.6x and expected MADS by 6.5x, providing debt service cushions of 94% and 85% respectively.
LIMITED LEVERAGE PLANS: The authority funds the bulk of its projects from federal, state and local grants as well as ongoing sales...
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