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Sterling Hills West Metropolitan District, CO -- Moody's upgrades to A3 Sterling Hills West Metro District, CO's issuer and GOLT ratings; outlook stable

·11 min read

Rating Action: Moody's upgrades to A3 Sterling Hills West Metro District, CO's issuer and GOLT ratings; outlook stableGlobal Credit Research - 04 Feb 2021New York, February 04, 2021 -- Moody's Investors Service has upgraded Sterling Hills West Metropolitan District, CO's issuer rating and general obligation limited tax (GOLT) rating to A3 from Baa1, affecting approximately $10.8 million in outstanding debt. The outlook remains stable.RATINGS RATIONALEThe issuer rating upgrade to A3 reflects the district's growing tax base coupled with the maintenance of adequate operating reserves relative to the limited operations of the district. The rating also considers the small size of the tax base and its favorable location in the Denver metro area, a moderate debt burden with no plans for additional bond issuance and lack of pension liability. The coronavirus is not a key driver of this rating action, given that the district is largely funded by property taxes, which tend to be more stable over time.The upgrade of the GOLT rating to A3 reflects the upgrade of issuer rating. It is the same as the issuer rating due to significant headroom under the tax cap to pay debt service. Based on the fiscal 2020 certified full valuation, maximum pledged revenues provide approximately 1.8 times coverage of maximum annual debt service (MADS).RATING OUTLOOKThe stable outlook reflects our expectation that the district's credit quality will remain consistent due to its built-out nature and favorable location in Aurora, CO (Aaa stable).FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Moderation of the debt burden- Increased operating reservesFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Materially reduced reserves supporting debt service- Increase in the debt burdenLEGAL SECURITYThe bonds are secured by a limited tax pledge capped at 57.56 mills, as well as specific ownership taxes. The bonds will be converted to an unlimited tax pledge on the first date on which the debt to assessed value ratio is 40% or less and no amounts of principal or interest on the bonds are due but unpaid.PROFILESterling Hills West Metropolitan District was created to fund the construction of public infrastructure to be handed over to the City of Aurora and currently maintains three parks and a stormwater detention pond in a residential area. The district encompasses approximately 240 acres and is located in the southeast portion of the Aurora.METHODOLOGYThe principal methodology used in these ratings 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.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.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. Catherine Nicolosi 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 Dan Seymour Additional Contact Rtgs And Proc Ovsght 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 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. 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