Press Release|Public Finance

KBRA Affirms AA+ Rating and Revises the Rating Outlook to Stable From Positive on City of Dallas, TX General Obligations

30 Oct 2024   |   New York

Contacts

KBRA Affirms the AA+ Long-Term Rating and revises the Rating Outlook to Stable from Positive on City of Dallas, TX General Obligations, including General Obligation Bonds, Certificates of Obligation and Equipment Acquisition Notes.

The rating affirmation is anchored by the City's sound financial profile, financial management practices, healthy reserves and ample liquidity. The Outlook revision to Stable is based on the limited improvement in the City's pension funding metrics to date which may limit future financial flexibility.

Key Credit Considerations

The ratings were affirmed because of the following key credit considerations:

Credit Positives

  • Strong financial profile reflecting fiscally conservative financial management practices, solid reserves, and healthy liquidity.
  • Robust economic growth, evidenced by a diverse, growing tax and resource base, and unemployment rates which have trended below the state average.
  • History of achieving budgetary balance through operating expense reductions and without the use of reserves, while simultaneously reducing the property tax rate.

Credit Challenges

  • Pension costs are expected to remain elevated. Low pension funded ratios have the potential to restrict future financial flexibility.
  • Partial reliance on sales tax receipts for operations exposes revenue base to economic fluctuation.

Rating Sensitivities

For Upgrade:

  • Tangible progress in addressing full funding of the actuarially determined pension contributions while maintaining robust financial strength.

For Downgrade:

  • Deviation from the City’s practice of conservative budgeting would increase credit risk.

To access ratings and relevant documents, click here.

Methodologies

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1006637

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