Spanish Fork City, UT Sales Tax Revenue Bond Rating Raised To 'AA' On The Application Of Our Criteria

CENTENNIAL (S&P Global Ratings) April 12, 2019--S&P Global Ratings raised its long-term rating to 'AA' from 'AA-' on Spanish Fork City, Utah's series 2014 sales tax revenue bonds. The outlook is stable.
"The raised rating reflects our view of the application of our priority-lien tax revenue debt criteria, published Oct. 22, 2018, on RatingsDirect," said S&P Global Ratings credit analyst David Mares. "Our criteria factors in both the strength and stability of the pledged revenue, as well as the general credit quality of the municipality where taxes are distributed and collected," Mr. Mares added.
Key credit considerations include:
  • An adequate economic base benefitting ties to the Provo-Orem metropolitan economic area (MSA), as well as state-shared component of pledged revenues;
  • Our view that nationwide sales taxes have historically demonstrated low volatility, a view that extends to the city's locally levied energy sales tax; and
  • The city's additional bonds test (ABT) at 2.0x maximum annual debt service (MADS) and dependence on pledged revenue for general operations, which reduces the likelihood that the city will issue additional debt to the fullest extent of the additional bonds test (ABT).
Spanish Fork City is located in Utah County, about eight miles south of the city of Provo, along Interstate 15 and Highway 6. Rapid development along Interstate 15 has expanded into areas south of Provo.
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