Cinco Municipal Utility District No. 8, TX GO Outlook Revised To Stable From Negative On Fairly Stable Net Debt Ratios

DALLAS (S&P Global Ratings) Feb. 4, 2019--S&P Global Ratings revised the 
outlook on its 'A-' underlying rating (SPUR) on Cinco Municipal Utility 
District (MUD) No. 8, Texas' general obligation (GO) debt to stable from 
negative and affirmed the rating. 

The outlook revision reflects S&P Global Ratings' opinion of the MUD's 
relatively stable overall net debt ratios despite a material decrease in total 
assessed valuation following Hurricane Harvey. In addition, the rating service 
believes finances will likely rebound quickly from storm-related one-time 
spending, particularly if the MUD receives Federal Emergency Management Agency 
reimbursements promptly. 

The stable outlook reflects S&P Global Ratings' opinion that the MUD will 
likely rebuild and maintain historically strong finances and that mature 
development will likely limit any significant capital or debt needs. In 
addition, the recent tax rate change should allow management to stabilize 
financial performance during the next few fiscal years.

"We do not expect to change the rating within the two-year outlook period. 
However, assuming all other rating factors remain stable or improve, we could 
raise the rating if overall net debt were to continue to decrease to levels we 
consider comparable with higher-rated peers, coupled with a return to very 
strong reserves and low direct tax rates," said S&P Global Ratings credit 
analyst Stephen Doyle. "If debt were to escalate significantly or reserves 
were to decrease materially below levels we consider commensurate with the 
current rating, we could lower the rating."

Hurricane Harvey's heavy rains had a great effect on the MUD, causing flooding 
throughout most of its borders due to increased water in Barker reservoir, 
just northeast of the MUD. With more than 90% of homes experiencing some kind 
of flooding or damage, assessed value has decreased by 30% for fiscal 2019 to 
$214 million from $308 million in fiscal 2018.

An unlimited-ad valorem-property-tax pledge, levied on all taxable property in 
the MUD, secures the bonds.
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