Assigns Aa2 to LOBs, Ser. 2021A
New York, January 07, 2021 -- Moody's Investors Service has assigned a Aa2 to Dare County, NC's $26.4 million Limited Obligation Bonds (County of Dare, North Carolina), Series 2021A. Concurrently, we have upgraded the county's issuer rating to Aa1 from Aa2 and upgraded the rating on the county's parity LOBs outstanding to Aa2 from Aa3.
RATINGS RATIONALE
The upgrade to Aa1 reflects the county's positive operating performance in recent years, leading to healthy reserves and cash, which will continue to be supported by long-term planning and formal policies. The rating also incorporates the county's large and growing tax base that serves as a tourist destination with very strong property wealth levels. The county's long-term liabilities and fixed costs are manageable.
The LOBs are rated one notch off of the county's issuer rating because they are subject to annual appropriation, the essential nature of the pledged assets (a Department of Health and Human Services complex) and legal structure.
RATING OUTLOOK
Outlooks are not typically assigned to local government issuers with this amount of debt outstanding.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Continued tax base expansion and demonstrated ability to mitigate environmental risks
- Strengthened income levels
- Sustained positive operating trends leading to improved reserves and cash
- Upgrade of the county's issuer rating (LOBs only)
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Tax base deterioration or weakened income and wealth levels
- Trend of structural imbalance leading to declines in reserves and cash
- Significant increase in debt or capital needs
- Downgrade of the county's issuer rating (LOBs only)
LEGAL SECURITY
The Series 2021A LOBs are secured by the county's pledge to annually appropriate debt service payments and by a first lien on pledged collateral comprised of the Department of Health and Human Services complex. The county will make payments under the Installment Finance Contract directly to the Trustee at least five days prior to debt service payment dates. There is no debt service reserve requirement.
USE OF PROCEEDS
Bond proceeds will fund projects for the College of the Albemarle, Dare County Schools, the county's animal shelter and Department of Health and Human Services.
PROFILE
Dare County is located on the Albemarle-Pamlico Peninsula along the North Carolina coast and contains 110 miles of shoreline known as the Outer Banks. The county covers 1,273 square miles, approximately 382 of which is land. A robust tourism industry results in a large swell in population during the summer months, with the 2020 estimated permanent population of 37,599 increasing to a peak of at least 250,000 between Memorial Day and Labor Day.
METHODOLOGY
The principal methodology used in the issuer rating was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. The principal methodology used in the lease ratings was Lease, Appropriation, Moral Obligation and Comparable Debt of US State and Local Governments published in July 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1102364. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.
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.
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Lauren Von Bargen
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