Default Leads to Ratings Disparity for Texas County

Albanese, Elizabeth
March 2003
Bond Buyer;3/19/2003, Vol. 343 Issue 31596, p3
Trade Publication
Standard & Poor's Corp. has downgraded Hays County, Texas to BBB-minus from A-plus after the county said it was not liable for defaulted lease purchase debt, but Moody's Investors Service Inc. affirmed the county's general obligation debt at Aa3. The downgrade comes after county commissioners opted on March 18, 2003 not to appropriate funding to cure a default of 6 million dollars of lease-purchase bonds privately placed in 1999 to finance a 96-bed juvenile detention facility and boot camp. The debt was issued by the Hays County Public Facilities Authority and backed by revenues from housing local juveniles and juveniles from other Texas counties. While county officials and their bond counsel and financial adviser maintain that only the Public Facilities Authority has the responsibility of repaying the bonds, Standard & Poor's analysts have released an opinion that the Hays County government itself is liable for the debt.


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