KBRA Assigns AA Rating with Stable Outlook to Sulphur Springs ISD, TX Unlimited Tax School Building Bonds Series 2026

NEW YORK--(BUSINESS WIRE)-- KBRA assigns a long-term rating of AA to the Sulphur Springs Independent School District (the District), Texas, Unlimited Tax School Building Bonds, Series 2026 (the 2026 Bonds). In addition, KBRA assigns a AA rating on outstanding parity debt. The Outlook is Stable.

Proceeds of the 2026 Bonds will fund the construction, acquisition, rehabilitation, renovation, expansion and equipment of school buildings; capitalized interest; and the costs of issuance. The 2026 Bonds are payable from a direct and continuing pledge of ad valorem taxes levied on all taxable property within the District, without limitation as to rate or amount. The Bonds are expected to be guaranteed by the State's Permanent School Fund (PSF) guarantee program for the full and timely payment of principal and interest. KBRA's rating on the Bonds is based solely on the underlying credit standing of the District, without consideration of the support afforded by the PSF guarantee program.

Key Credit Considerations

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

Credit Positives

• Established history of prudent reserve maintenance and solid liquidity.
• Growing tax base provides reliable source of payment for unlimited tax bonds.
• Fixed cost burden for debt service, pensions, and OPEB contributions is very affordable.

Credit Challenges

• Gradually declining enrollment and recent history of very modest adjustment to statutory per pupil funding entitlement pressure operating flexibility.
• Moderate concentration in the tax base with the ten largest taxpayers comprising 29% of taxable assessed value.

Rating Sensitivities

For Upgrade

• Significant growth and diversification in the tax base.

For Downgrade

• Decline in reserves and unrestricted liquidity to levels no longer commensurate with the rating level.
• While not expected, a trend of deterioration in the ad valorem tax base.

To access ratings and relevant documents, click here.

Methodology

• Public Finance: U.S. Local Government General Obligation 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), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan?s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1014796

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Source: Kroll Bond Rating Agency, LLC