KBRA Assigns AA+ Rating to The Metropolitan Government of Nashville and Davidson County, TN General Obligation Improvement Bonds; Outlook Stable
1 Oct 2024 | New York
KBRA assigns a rating of AA+ to The Metropolitan Government of Nashville and Davidson County, TN (Metro) General Obligation Improvement Bonds (“the Bonds”). The Outlook is Stable.
The assigned general obligation bond rating reflects the Metropolitan Government of Nashville and Davidson County’s (the "Metropolitan Government", “Metro” or “City”) favorable socioeconomic and demographic trends, strong institutional practices, moderate level of debt amortized at an above-average rate, and well-maintained financial operations distinguished by recently augmented reserves which were further buttressed by a strengthened reserve policy.
The Series 2024 Bonds are direct obligations of the Metropolitan Government, payable from unlimited ad valorem taxes to be levied on all taxable property within the Metropolitan Government without limitation as to rate or amount. KBRA understands that the Bonds are being issued to: (i) finance the costs of various capital improvement projects of the Metropolitan Government as authorized pursuant to the Initial Resolutions; (ii) retire a portion of the principal amount of the Metropolitan Government’s outstanding general obligation commercial paper bond anticipation notes at maturity; and (iii) pay certain costs of issuance related to the Bonds.
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- Metro’s broad and diverse economic base that features governmental, commercial, institutional, healthcare and tourism-based activity, and sizable property tax base.
- Well-maintained financial operations, strengthened through recent operating surpluses and adoption of a more restrictive fund balance policy.
- Adopted financial and debt policies that provide a framework for effective management.
Credit Challenges
- Presence of contingent liabilities related to debt issued by Metro-controlled authorities.
- Ongoing operating subsidies to NGH.
Rating Sensitivities
For Upgrade
- Maintenance of financial reserves while addressing identified capital needs.
- Elimination of subsidy to the Metro-owned Nashville General Hospital, which KBRA presently views as unlikely.
For Downgrade
- Significant unplanned draws on accumulated reserves.
- Failure to adhere to adopted policies and procedures.
To access rating and relevant documents, click here.