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Fort Bend County Municipal Management District 1, TX -- Moody's assigns Baa2 to Fort Bend County MMD 1, TX's GOULT bonds; stable outlook

·12 mins read

Rating Action: Moody's assigns Baa2 to Fort Bend County MMD 1, TX's GOULT bonds; stable outlook

Global Credit Research - 27 Aug 2020

New York, August 27, 2020 -- Moody's Investors Service assigns a Baa2 to Fort Bend County Municipal Management District 1, TX's $8.8 million Unlimited Tax Road Bonds, Series 2020. Moody's maintains a Baa2 rating on the district's outstanding general obligation unlimited tax (GOULT) debt. The outlook is stable.

RATINGS RATIONALE

The Baa2 rating reflects a moderately-sized, but rapidly growing tax base as well as a limited financial history with modest, but growing reserves. The rating also reflects a lack of pension or other post-employment benefit liabilities as well as a high debt profile that will remain high due to slow payout and future issuance plans.

The coronavirus outbreak is a social risk under our ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action. We do not see any material immediate credit risks for Fort Bend County Municipal Management District 1 due to the district's ample taxing headroom to avert potential financial stress. However, the situation surrounding the coronavirus is rapidly evolving and the longer-term impact will depend on both the severity and duration of the crisis. A long and severe downturn could cause a material slowdown in assessed value growth. If our view of the credit quality of the district changes, we will update the rating and/or outlook at that time.

RATING OUTLOOK

The stable outlook reflects our expectation that the tax base will continue to grow, albeit at a slower pace, given ongoing development, which will help to offset additional debt plans. In addition, we expect reserves will gradually increase given budgeted surpluses.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

- Continued growth of the district's tax base

- Further increase in reserve levels

- Significant decline in the debt burden

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

- Trend of declining assessed valuation

- Decline in reserves

- Increase in the debt burden absent tax base or revenue growth

LEGAL SECURITY

The Series 2020 bonds are secured by an annual ad valorem tax levied, without legal limit as to rate or amount, against all taxable property located within the district.

USE OF PROCEEDS

Proceeds of the Series 2020 bonds will be used to finance the construction of roads and road improvements in the district.

PROFILE

The district encompasses approximately 1,056 total acres (798 developable) and is partially within the extraterritorial jurisdictions of the City of Houston (Aa3 stable) and the City of Richmond. The district is within the boundaries of Fort Bend Independent School District. The district finances road and recreational facilities within the master planned community of Harvest Green. The district's estimated population is 5,044.

METHODOLOGY

The principal methodology used in this rating was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Tobias Oder Lead Analyst Regional PFG Dallas Moody's Investors Service, Inc. Plaza Of The Americas 600 North Pearl St. Suite 2165 Dallas 75201 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Tatiana Killen Additional Contact PF General Administration JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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