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FitchRatings <br />FITCH RATES CABARRUS COUNTY, NC LTD OBLIGATION <br />BONDS 'AA'; AFFIRMS GOS AT 'AA +' <br />Fitch Ratings -New York -27 May 2011: Fitch Ratings assigns an 'AA' rating to the following <br />Cabarrus County, North Carolina (the county) limited obligation bonds: <br />-- $11.975 million (County of Cabarrus, North Carolina Installment Financing Contract) refunding <br />limited obligation bonds, series 201113; <br />-- $22.72 million (County of Cabarrus, North Carolina Installment Financing Contract) refunding <br />limited obligation bonds, series 2011C. <br />The bonds are expected to sell via negotiation on June 2. Bond proceeds will be used to refund a <br />portion of the county's outstanding debt and pay costs of issuance. <br />At this time, Fitch also affirms the ratings on the county's outstanding debt as follows: <br />-- $112.6 million general obligation (GO) bonds affirmed at'AA +'; <br />- -$295 million certificates of participation (COPS) affirmed WAX. <br />The Rating Outlook is Stable. <br />RATING RATIONALE: <br />- -The rating on the lease obligations, including the current issuance of LOBS and outstanding COPS, <br />incorporates the general credit characteristics of the county and debt service being subject to annual <br />appropriation. Appropriation risk is largely offset by the essential nature of the mortgaged property, <br />upon which the trustee may foreclose if annual debt service payments are insufficient; <br />-- Financial management is sound, highlighted by consistent operating results, high liquidity levels <br />and healthy reserves; <br />- -The county continues to benefit from its proximity to Charlotte, a regional economic anchor; <br />-- Despite the loss of a prior major taxpayer and employer, Phillip Morris, the county's direct <br />economy continues to deepen and diversify; <br />- -The county's debt burden is moderate and is expected to remain manageable given the county's <br />limited capital needs; <br />KEY RATING DRIVER: <br />- -The county is expected to maintain adequate financial flexibility in the upcoming years despite <br />ongoing budgetary pressures. <br />SECURITY: <br />The COPS and LOBS are secured by lease payments subject to annual appropriation and by assets <br />pledged to secure the debt. The GO bonds are general obligations of the county, secured by its full <br />faith and credit pledge. <br />CREDIT SUMMARY: <br />Each series of lease obligations, including the LOBS as well as outstanding COPS, is payable from <br />installment payments subject to appropriation payable by the county under and pursuant to the <br />respective contracts. Under each of the indentures, the Cabarrus County Development Corporation <br />(the corporation) assigns to the trustee all its rights as beneficiary under the appropriate deed of <br />trust, including its right, title and interest in the applicable premises, for the benefit of bondholders. <br />The county has previously executed deed of trusts conveying the applicable premises to the <br />appropriate deed of trust trustee as security for its obligations under the appropriate contract. If <br />installment payments are insufficient to meet debt service on the respective bonds, the trustee may <br />foreclose upon the respective properties. Mortgaged property conveyed under the deed of trust <br />includes several elementary schools, middle schools and high schools and provides sufficient <br />incentive to appropriate. <br />Attachment number 1 <br />1 -1 Page 347 <br />