Rating Action: Moody's assigns Baa3 to City of Jackson, MS' GOULT BondsGlobal Credit Research - 05 Feb 2021New York, February 05, 2021 -- Moody's Investors Service has assigned a Baa3 rating to the City of Jackson, MS' General Obligation Refunding Bonds Series 2021. The bonds have an expected par value of $17 million. We also maintain a Baa3 on the city's $108 million of outstanding general obligation unlimited tax debt (GOULT).RATINGS RATIONALEThe city's credit profile has not undergone any material changes since our last review and detailed credit opinion in November 2020 when we affirmed the city Baa3 rating. The rating reflects a reduction of general fund exposure to the water and sewer system that is facing significant operating challenges but has been strengthened by the recent receipt of settlement money that significantly improved the system's cash and stability. The rating also reflects the city's financial performance, which has improved steadily and is poised to remain stable given reimbursement to the city's general fund for a loan to the water and sewer system, budgetary conservatism, and the maintenance of cost controls to gird against the still developing impacts of the COVID-19 outbreak. The city's economy benefits from a sizeable and stable tax base highlighted by a significant public sector including the state capitol and large educational and medical components. However, the economy remains hampered by very low resident wealth, persistent high poverty rates and a recent spike in unemployment driven by the economic slowdown resulting from COVID-19. The city's credit quality is also weakened by fixed costs reflecting cresting debt service and sizeable pension obligations.We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. However, we do not currently expect the outbreak to drive a material change in the city's credit profile. The city does not currently anticipate any new health or economic restrictions issued by either local or state authorities. This will help the area's economic recovery including the gradual easing of unemployment. The long term credit impact of COVID -19 will depend on both the severity and duration of the crisis and its impact on the economy and, in particular, sales tax revenues.RATING OUTLOOKThe stable outlook reflects our expectation that the general fund will no longer have to support water and sewer operations as a result of an infusion of cash into the enterprise as well as repayment of the general fund's loan to the system. The outlook also incorporates the city's financial position, which is on-track to remain solid despite high fixed costs and the still developing pandemic and its economic impact. This uncertainty is countered by the city's implementation of cost controls and conservative budgeting that will allow it to maintain consistent operations.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING-Consistent operating balance resulting in steady growth of cash and reserves-Significantly strengthened enterprise operations including effective implementation of efficient revenue collection system-Material economic expansion resulting in a stronger tax base and resident wealthFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING-Operating deficits that materially weaken cash and reserves-Reliance on general fund resources to subsidize other funds-Material economic deterioration including long term increase of unemploymentLEGAL SECURITYThe city's GOULT debt is secured by an annual ad valorem tax, levied against all taxable property in the city without legal limitation as to rate or amount.USE OF PROCEEDSProceeds of the sale will be used to provide for the refunding, defeasance and/or restructuring of all or a portion of the outstanding Refunded Bonds. Final maturity of the city GO bonds remains 2036.PROFILEThe City of Jackson is Mississippi's (Aa2 stable) capital and located in Hinds County(Aa3) in the southwestern portion of the state. Jackson is the largest city in Mississippi with a population of approximately 168,000. The largest industry sectors that drive the local economy are health services, state government, and retail trade.METHODOLOGYThe principal methodology used in this rating was US Local Government General Obligation Debt published in January 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1260094. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor 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.The rating has been disclosed to the rated entity or its designated agent (s) and issued with no amendment resulting from that disclosure.This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website 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_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. 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