Moody’s Investors Service has upgraded to Aa2 from Aa3 the rating on DeKalb County GA’s outstanding (general obligation unlimited tax (GOULT) bonds. The upgrade affects $226 million in outstanding general obligation bonds. The outlook is revised to stable from positive.
RATINGS RATIONALE
The upgrade to Aa2 reflects the county’s healthy and improved financial position driven by solid management and conservative budgeting. Further, the rating incorporates a large and diverse tax base, average resident wealth and incomes for the region and manageable debt and pension liabilities.
We regard the coronavirus outbreak as a social risk consideration 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 DeKalb County. However, the situation surrounding coronavirus is rapidly evolving and the longer term impact will depend on both the severity and duration of the crisis. If our view of the credit quality of DeKalb County changes, we will update the rating and/or outlook at that time.
RATING OUTLOOK
The stable outlook reflects the expectation that the county’s financial position will remain sound because of conservative budget assumptions and commitment to maintaining structural balance. The outlook also reflects continued growth in the county’s already sizeable tax base.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
– Increased fund balance and liquidity position
– Decrease in adjusted net pension liability
– Sustained tax base growth
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
– Tax base deterioration
– Trend of structural imbalance leading to limited operating flexibility
– Significant increase in fixed costs
LEGAL SECURITY
The outstanding 2016 GO bonds are secured by the county’s unlimited general obligation pledge levied within the Special Tax District, which accounts for approximately 83.5% of the county’s total assessed value. All remaining rated debt is secured by the county’s unlimited ad valorem tax pledge.
PROFILE
DeKalb County is located in northern Georgia, just east of Fulton County and Atlanta. The estimated population as of 2019 was 743,187.