KBRA Affirms AA Rating with Stable Outlook for Township of Upper Southampton, PA - G.O.
11 Oct 2024 | New York
KBRA affirms the long-term rating of AA with a Stable Outlook for the Township of Upper Southampton's General Obligation Debt and the Upper Southampton Municipal Authority's Guaranteed Revenue Notes, which are guaranteed by the Township’s full faith, credit, and unlimited tax pledge. KBRA’s rating on the Authority's Guaranteed Notes is based on the Township’s general obligation credit as the ultimate obligor.
Key Credit Considerations
The ratings were affirmed because of the following key credit considerations:
Credit Positives
- High level of financial flexibility afforded by the Township’s consistently strong unassigned fund balance and liquidity position.
- Manageable fixed cost burden coupled with well-funded pensions.
- Favorable resource base, evidenced by strong income and wealth levels, with good commuter access to a major employment hub.
Credit Challenges
- General fund revenue base is somewhat dependent on earned income taxes, which are economically sensitive.
The Stable Outlook reflects KBRA’s expectation that the Township will continue to maintain structurally balanced operations while preserving strong unassigned reserves and liquidity. It also reflects KBRA’s expectation that the Authority will continue to pay debt service on the Guaranteed Notes without assistance from the Township.
Rating Sensitivities
For Upgrade
- Adoption of formal reserve policies and other financial practices.
- Significant reduction in direct and overlapping debt burden.
For Downgrade
- Significant deterioration in the municipal resource base.
- Persistent trend of operating deficits and erosion to unassigned fund balance and liquidity position.
To access rating and relevant documents, click here.