Salvation Army Central Territory, IL Assigned #AA-# Issuer Credit Rating

Stocks and Financial Services Press Releases Monday December 19, 2016 17:14
NEW YORK--19 Dec--S&P Global Ratings

NEW YORK (S&P Global Ratings) Dec. 18, 2016--S&P Global Ratings assigned its 'AA-' issuer credit rating (ICR) to the Salvation Army Central Territory, Ill. (SACT). At the same time, we assigned our 'A-1+' short-term rating to SACT's $155 million series 2016A taxable commercial paper program (CP).

The outlook on the ICR is stable. The ICR does not refer to any debt instrument, and instead reflects our view of the SACT's overall long-term credit quality.

"The ratings reflect our opinion of the organization's long record of solid fundraising performance, wide brand recognition, strong and generally stable financial resources supported by a large investment portfolio and low debt," said S&P Global Ratings analyst Ken Rodgers.

Offsetting factors include deficit operations on a full accrual and cash basis and dependence upon fundraising and investment income for positive bottom line performance in most years. In addition, while not very large, SACT has unfunded retirement obligations that are likely to rise in the future in our view based on its present funding trend.

Also, most of its debt is subject to interest rate risk although we understand SACT may use swaps to mitigate some of this risk in the future.

The 'A-1+' CP rating reflects our view of the SACT's clearly identified resources and procedures to guarantee the full and timely purchase price of its $155 million series 2016A taxable CP program, for which the SACT is providing self-liquidity.

Management has established clear and detailed procedures to ensure the maintenance of sufficient asset coverage and to meet liquidity demands on a timely basis. The CP notes are an unsecured general obligation of the SACT. We understand that the amount of CP maturing in any seven consecutive calendar days will be limited to $50 million.

The stable outlook reflects our opinion that the SACT will likely balance its bottom line results while incurring deficits on an operating basis. In addition, we believe it will maintain its financial resource ratios consistent with the rating category, and maintain fundraising efforts to support its contracted social service programs.

We could consider a negative rating action if financial resources decline significantly, if operations decline significantly relative to the SACT's historical operating performance, or if the SACT issues additional debt without commensurate growth in financial resources. We do not consider a positive rating action likely within the outlook period, but we would take a positive view of continued improvement in reserves, greater separation of management and board, and timelier consolidated financial reporting including producing interim results.

The Salvation Army is an international religious and charitable organization, headquartered in London with its U.S. operations coordinated by its national headquarters in Alexandria, Va. Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria.

Please see Ratings Criteria at for further information. Complete ratings information is available to subscribers of RatingsDirect at and

All ratings affected by this rating action can be found on the S&P Global Ratings' public website at Use the Ratings search box located in the left column.

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