Minneapolis-St. Paul Metropolitan Council's Series 2019A GO Transit Bonds Rated 'AAA'; Outlook Stable

CHICAGO (S&P Global Ratings) May 17, 2019--S&P Global Ratings assigned its 'AAA' long-term rating to the Minneapolis-St. Paul Metropolitan Council's series 2019A general obligation (GO) transit bonds, and series 2019B GO transit bonds (Heywood Garage II). At the same time, S&P Global Ratings affirmed its 'AAA' long-term rating on the council's previously issued GO debt, and its 'AA+' long-term rating on the council's 2014E refunding certificates of participation (COPs). The outlook is stable.
Each series of bonds is secured by the council's unlimited-tax GO pledge and power to levy direct general ad valorem taxes on all taxable property within the council's area without limit as to rate or amount. The council will use the 2019A bond proceeds for transit improvements and 2019B proceeds for the expansion of and improvements to the Heywood Garage.
The 'AA+' rating on the series 2014E refunding COPs reflects the application of our "Issue Credit Ratings Linked To U.S. Public Finance Obligors' Creditworthiness" criteria (published Jan. 22, 2018). The COPs are payable solely from rental payments to be made by the council in accordance with a lease-purchase agreement between the council and Wells Fargo Bank N.A., as trustee. The rental payments are subject to annual appropriation, which accounts for the one-notch differential in our ratings on the COPs and on the GO debt.
"The 'AAA' rating reflects our assessment of the council's economic base, covering the entire Minneapolis-St. Paul (Twin Cities) metropolitan statistical area, broad tax base that spans a seven-county area, strong financial position and tight fiscal management, and moderate debt," said S&P Global Ratings credit analyst Scott Nees.
The Minneapolis-St. Paul Metropolitan Council is a component unit of the state of Minnesota and is responsible for coordinating long-range regional planning and development in the Minneapolis-St. Paul metropolitan statistical area (MSA). The council serves a population of about 3.1 million and encompasses a geographic area of approximately 3,000 square miles that includes 189 cities and towns in the seven-county MSA.
The stable outlook reflects our view of the strong and stable Twin Cities MSA economy, which has supported a deep and diverse tax base that has seen healthy growth in recent years, and which should continue to grow at a good pace in the near term. The outlook also reflects our view of the council's strong financial position, positive trends in most of its key revenue streams, and its tight oversight of its finances, as demonstrated by management's consistently meeting or exceeding its fiscal targets across all operating divisions. Given that we do not expect any material changes in any of these key factors in the near term, we do not expect to lower the rating within the two-year outlook horizon. If the council's financial position deteriorates materially due to unaddressed fiscal pressures to the extent that we no longer consider its overall credit quality consistent with that of its 'AAA' rated peers, we could lower the rating.
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