St. Francis County, AR's Series 2020 Sales And Use Tax Bonds Rated 'A-'

CENTENNIAL (S&P Global Ratings) March 24, 2020--S&P Global Ratings assigned its 'A-' rating to St. Francis County, Ark.'s $12.685 million series 2020 sales and use tax bonds. The outlook is stable.
The bonds are secured by and payable from the collection of a 0.625% debt service sales and use tax and a 0.25% jail and law enforcement sales and use tax. Bond proceeds will be used to construct a new jail and law enforcement facilities.
"The rating reflects our view of the county's very weak-to-weak economy with a population of 25,615 and per capita effective buying income at 51% of the national average," said S&P Global Ratings credit analyst Calix Sholander. "It also reflect the county's covenant to not issue additional parity debt and its low revenue volatility."
While estimated sales and use tax collections from fiscal 2019 would have provided 1.4x maximum annual debt service (MADS) coverage, at $2.5 million, we believe actual collection in fiscal 2020 may be lower given the general economic slowdown from the COVID-19 pandemic. However, although the local economy is somewhat limited and centered on agriculture, it has historically been stable, and we expect MADS coverage will be at least adequate over the two-year outlook period. We note that the county maintains stable operations and very strong reserves, and we do not believe that its creditworthiness limits the rating on the sales and use tax bonds.
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