Ratings Withdrawn On Four Issuers' Revenue Bonds On Insufficient Information From Federal Entities

DALLAS (S&P Global Ratings) April 2, 2019--S&P Global Ratings has withdrawn 
its ratings on four issuers' revenue bonds that are secured by project 
revenues from federal contracts. At the same time, S&P Global Ratings has 
removed the ratings from CreditWatch, where they were placed with negative 
implications Dec. 21, 2018. The issuers and ratings affected are as follows:

  • Fannin County Public Facility Corp., Texas (BB/Watch Neg);
  • Willacy County Public Facility Corp., Texas (BB+/Watch Neg);
  • Hudspeth County, Texas/ West Texas Detention Facilities Corp., Texas (BB/Watch Neg);
  • Garza County Public Facilities Corp., Texas (B/Watch Neg).
We base these rating actions on our inability to communicate with the federal 
agency that appropriates the funding, or the operator who manages a specific 
facility. As stated in our Dec. 21, 2018 publication, we have increasingly 
come to view ongoing direct access to the major parties engaged in the federal 
contracts and operating agreements, including the federal agency under 
contract (Immigration and Customs Enforcement, the Bureau of Prisons, or U.S. 
Marshals Service), the operator, and an issuer representative as key 
components in our assessment of this sector's credit quality. And, to maintain 
a rating in this sector, we will need to speak with the federal agency that 
appropriates the funding at least annually, the operator who runs the facility 
at least quarterly, and the issuer that supports the transactions at least 
annually. Failure to receive the requested information will likely result in 
our withdrawal of the affected rating, preceded in accordance with our 
policies. 

We have made repeated attempts to have direct, regular communication with 
these federal entities and operators. Despite our efforts, we have been unable 
to communicate with the federal agencies that have contracts with these local 
entities. Furthermore, given our unsuccessful outreach attempts we believe it 
is unlikely that any sort of meaningful dialogue will be forthcoming or be 
maintained on a regular basis. 

Limited or incomplete access to the federal entities limits our ability to 
reflect federal policy changes in our ratings and report on programmatic or 
appropriations-related risks within the sector. While the federal budget is 
accessible via publicly available sources, we have very little insight into 
important aspects of federal policies that have been key drivers of rating 
changes in the past two-year period, such as lack of contract renewal or 
bipartisan funding deals brokered on reduction of funding for detention beds. 
Furthermore, without access to the prison operators we cannot analyze 
operational issues that might influence the facilities or their compliance 
with state and federal regulations. As a result, we do not have sufficient 
information to maintain these ratings and are withdrawing the ratings in 
accordance with our policies. For more information, see "How Quality And 
Timeliness Of Information Are Incorporated Into U.S. Public Finance’s Rating 
Process," published Oct. 25, 2016, on RatingsDirect.
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