KBRA Affirms AA+ Rating on City of Pflugerville, TX Bonds
18 Jul 2024 | New York
KBRA affirms the AA+ long-term Rating and Stable Outlook for the City of Pflugerville, TX’s outstanding Combination Tax and Limited Revenue Certificates of Obligation and Limited Tax Bonds.
KBRA’s Stable Outlook reflects the expectation that Pflugerville will continue to maintain strong unassigned reserve and liquidity levels, and that management will be able to adequately adjust governmental spending should the pace of development moderate or the associated rate of tax and resource base growth realized in recent years begin to wane. The City’s participation in the robust Austin MSA economy and employment base lends additional stability to the rating, in our view, as does the City’s abundance of developable land.
Key Credit Considerations
The ratings were affirmed because of the following key credit considerations:
Credit Positives
- Strong financial operating performance and position, reflecting somewhat conservative financial management policies and procedures, strong reserve levels, and the maintenance of solid unrestricted liquidity.
- Favorable local economic base, coupled with commutable proximity to Austin and a rapidly growing taxable base.
Credit Challenges
- Property tax levy limitations have the potential to adversely impact expenditure flexibility.
- Partial reliance on economically-sensitive sales tax receipts to fund government operations.
- Elevated overall net debt burden when measured on a per capita basis.
- Substantial infrastructure investments are needed to accommodate rapid ongoing economic growth.
Rating Sensitivities
For Upgrade
- The continued realization of robust tax base and revenue growth.
- Continued favorable financial operating performance further bolstering reserve levels and liquidity.
- A protracted decline in the City’s overall net debt burden and anticipated borrowing needs.
For Downgrade
- An erosion in reserves or unrestricted liquidity to levels no longer commensurate with the assigned rating.
- A material spike in borrowing and corresponding aggregate debt metrics.
To access rating and relevant documents, click here.