City of Pharr’s Credit Rating Upgraded from “A+” to “AA-”
Pharr, Texas – S&P Global Ratings, the world’s leading provider of credit ratings, announced this week that it has raised the City of Pharr’s credit from “A+” to “AA-“. The “AA-” rating reflects S&P Global Ratings’ long-term rating and underlying rating (SPUR) on Pharr’s general obligation (GO) debt, as well as its long-term rating to the city’s series 2018 combination tax and revenue certificates of obligation. According to a news release released by S&P Global Ratings on Tuesday, September 25, 2018, Pharr’s outlook is stable.
“This upgraded credit rating is demonstrative of Pharr’s commitment to maintaining effective fiscal accountability and efficient management of taxpayer funds,” said Mayor Ambrosio Hernandez, M.D. “We applaud our city administration’s strong management, superb budgetary performance and exceptional budgetary flexibility, which has led to a positive, stable outlook for our community,” Hernandez continued.
In its RatingsDirect summary for Pharr, Texas; General Obligation, S&P Global Ratings stated the following rationale for the upgraded rating:
The city’s total direct debt of $122.5 million consists of $80.4 million GO debt, $17.6 million governmental funds notes and leases, and $24.5 million enterprise revenue debt. The rating action reflects our view of the city’s conservative budgeting practices, reflected in a trend of favorable budget-to-actual results and the growth of available general fund balance to well above 30% of expenditures. While the general fund relies on revenue from the Pharr International Bridge, the bridge has historically maintained a strong operating performance and has been a source of consistent support, accounting for approximately 14% of total general fund revenue. We believe Pharr’s role as one of the largest commercial land crossings between the U.S. and Mexico and the city’s strong management further support the higher rating. We anticipate that, given these strengths, the city will be able to maintain its strong financial profile, despite uncertainty regarding potential changes in international trade.
“The rating action reflects our view of the city’s conservative budgeting practices, reflected in a trend of favorable budget-to-actual results and the growth of available general fund balance to well above 30% of expenditures,” said S&P Global Ratings credit analyst Karolina Norris in the release. The release further stated that the stable outlook reflects the rating agency’s view that Pharr will maintain its very strong budgetary flexibility and liquidity as well as strong performance, supported by strong management practices. The release added that the rating agency does not expect to change the rating within the two-year outlook horizon.
All ratings affected by this rating action can be found on S&P Global Ratings’ public website at www.standardandpoors.com.
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