Press Release|Public Finance
KBRA Assigns AA Rating, Stable Outlook, to Harris County, Texas Hotel Occupancy Tax Senior Lien Revenue Bonds, Taxable Series 2024
18 Nov 2024 | New York
KBRA assigns a long-term rating of AA, with a Stable Outlook, to Harris County, Texas Hotel Occupancy Tax Senior Lien Revenue Bonds, Taxable Series 2024.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Healthy level of senior lien debt service coverage, and no additional debt plans are expected on this lien at this time.
- Clearly defined pledge of revenues, and adequate legal package that includes a 1.35x additional bonds test.
Credit Challenges
- Pledged Revenues, while collected from a large geographic area, are limited in scope and could be adversely affected by economic factors extreme weather conditions or pandemics.
Rating Sensitivities
For Upgrade
- Given the narrow nature of the Pledged Revenue, in conjunction with some historic volatility, upward rating movement is not anticipated at this time. However, should Pledged Revenue register a consistent upward trajectory, in combination with the issuance of a limited amount of senior lien debt, there may be upward rating potential.
For Downgrade
- A decline in the hotel tax revenues resulting in significantly weaker debt service coverage.
- Additional borrowing that results in significantly lower debt service coverage.
To access ratings and relevant documents, click here.