Board of Directors Meeting Agenda


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Meeting Date: 06/21/2018  

SUBJECT MATTER:
Receive, consider and act upon a presentation regarding an Issuer Rating and Credit Opinion issued by Moody's Investor Service for The Woodlands Township; 
FISCAL IMPACT:
Not applicable
BACKGROUND:
On June 4, 2018, Moody's Investors Service assigned a Aa1 issuer rating to The Woodlands Township. 

According to Moody's definitions, "obligations rated Aa are judged to be of high quality and are subject to very low credit risk.  The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category."  The only credit rating higher than Aa1 is Aaa.

Highlights of the Credit Opinion published by Moody's include:
  • The Township has a history of strong fiscal management with maintenance of healthy fund balance and liquidity
  • Credit strengths include a large and diverse tax base, stable financial operations with sound reserves, and low debt and pension burdens
  • The Township benefits from conservative budgeting and careful expense management that has contributed to stable financial reserves
The Aa1 issuer rating reflects Moody's credit assessment of the Township's implicit general obligation credit strength and is used as a reference rating for the Township's sales and use tax and hotel occupancy tax bonds (revenue bonds), which currently have a rating of A1.  An issuer rating is a forward-looking opinion about an obligor's creditworthiness and does not apply to any specific financial obligation; thus the issuer rating does not affect any debt currently outstanding. 

Although Moody's routinely analyzes and publishes ratings for the Township's revenue bonds, this is the first time the credit agency has released an issuer rating related to the Township's general obligation credit strength.  The rating review was initiated by Moody's in conjunction with its new review procedures and was not based on a Township request.

Standard and Poor's (S & P) is the credit agency that has historically issued credit ratings on the Township's general obligation bonds.  The most recent rating was issued in July 2015 when S & P affirmed a credit rating of AA/Stable.  According to S & P's definitions, "An obligation rated AA differs from the highest-rated obligations (AAA) only to a small degree.  The obligor's capacity to meet its financial commitments on the obligation is very strong."
RECOMMENDATION:
Accept staff's report on an issuer rating and credit opinion issued by Moody's Investor Service.
Attachments
Moody's Press Release regarding Aa1 Issuer Rating
Moody's Credit Opinion - The Woodlands Township


    

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