KBRA assigns a long-term rating of AA, with a Stable Outlook, to Harris County, Texas Hotel Occupancy Tax Senior Lien Revenue Bonds, Taxable Series 2024.

Key Credit Considerations

The rating was assigned because of the following key credit considerations:

Credit Positives

• Healthy level of senior lien debt service coverage, and no additional debt plans are expected on this lien at this time.
• Clearly defined pledge of revenues, and adequate legal package that includes a 1.35x additional bonds test.

Credit Challenges

• Pledged Revenues, while collected from a large geographic area, are limited in scope and could be adversely affected by economic factors extreme weather conditions or pandemics.

Rating Sensitivities

For Upgrade

• Given the narrow nature of the Pledged Revenue, in conjunction with some historic volatility, upward rating movement is not anticipated at this time. However, should Pledged Revenue register a consistent upward trajectory, in combination with the issuance of a limited amount of senior lien debt, there may be upward rating potential.

For Downgrade

• A decline in the hotel tax revenues resulting in significantly weaker debt service coverage.
• Additional borrowing that results in significantly lower debt service coverage.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. Special Tax Revenue Bond Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1006898

View source version on businesswire.com: https://www.businesswire.com/news/home/20241118396234/en/