Henry County Board Of Education, AL Series 2011 Bond Rating Lowered To #A+# On Criteria Misapplication

Stocks and Financial Services Press Releases Friday June 15, 2018 09:25
DALLAS--15 Jun--S&P Global Ratings

DALLAS (S&P Global Ratings) June 14, 2018--S&P Global Ratings lowered its long-term rating to 'A+' from 'AA-' on the Henry County Public Education Cooperative District, Ala.'s series 2011 public education revenue bonds, supported by Henry County Board of Education (BOE). Concurrently, we have removed the rating on the series 2011 bonds from CreditWatch with negative implications, where it had been placed on April 12, 2018, in connection with our discovery of an error in the application of criteria.

S&P Global Ratings also assigned its 'A+' long-term rating to the district's series 2018-A taxable school tax refunding warrants and series 2018-B capital outlay school warrants, reflecting the application of its "Issue Credit Ratings Linked to U.S Public Finance Obligors' Creditworthiness" criteria, published Jan. 22, 2018, on RatingsDirect.

The outlook on all ratings is stable.

"The downgrade on the board's series 2011 bonds reflects the correction of a criteria misapplication and the application of the Ratings Linked criteria," said S&P Global Ratings analyst Karolina Norris. The misapplication of criteria occurred at the time of the review of the rating on the series 2011 bonds on July 27, 2017, when we incorrectly applied our "Special Tax Bonds" criteria, published Oct. 12, 2006, and our "Methodology: Rating Approach To Obligations With Multiple Revenue Streams" criteria, published Nov. 29, 2011.

The school system serves Henry County, located in southeast Alabama by the Georgia state line. Abbeville, the county seat, and Headland, primarily a bedroom community to Dothan, are the county's largest cities. The local economy is primarily rural and agriculture-based.

The stable outlook reflects our view of the board's strong-but-declining reserves, manageable debt profile, and stabilizing economy. Consequently, we don't expect to change the rating within the two-year outlook horizon.

We could lower the rating if the BOE continues to post operating deficits, leading to significant decreases in available reserves.

We could raise the rating if the local economy strengthens and diversifies materially, resulting in a material improvement of the board's income metrics to a level that we consider comparable with that of higher-rated peers, and if the board's reserves on a budgetary basis are maintained at strong levels, assuming no changes to other credit factors.

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 www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.


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