Moody's Assigns Aaa Rating to Rutherford County's Proposed School Bonds

Strategic Insights -

Rutherford County, TN, with a rapidly growing economy outside of Nashville, has been assigned a Aaa rating by Moody's Investors Service for its proposed $108 million General Obligation School Bonds, Series 2025B. The county's solid resident income, strong financial management, and prudent budgeting have contributed to this rating. With a healthy reserve and liquidity level, the county's available fund balance ratio was 86.5% of annual revenues as of fiscal 2024.

Key Takeaways:

  • Moody's assigned a Aaa rating to Rutherford County's proposed $108 million General Obligation School Bonds, Series 2025B, reflecting the county's rapidly growing economy outside of Nashville.
  • The rating also takes into consideration strong financial management and prudent budgeting, with a healthy reserve and liquidity level.
  • As of fiscal 2024, the county's available fund balance ratio was 86.5% of annual revenues, and its liquidity ratio was equally strong at 100.1% of annual revenues.
  • Management anticipates fiscal 2025 will end on a positive note, with a projected increase in the General Fund balance by $20 to $30 million.
  • However, the county's long-term liabilities are elevated at 219% of fiscal 2024 revenues, primarily due to large debt issuances to finance the increasing needs of the school system.
  • Rutherford County has unlimited ad valorem tax pledge, resulting in no distinction between the Aaa rating on the county's GOULT debt and its Aaa issuer rating.
  • The stable outlook reflects the expectation that the county will maintain healthy financial operations and manageable long-term liabilities over the near-term.

Statistics:

  • Rutherford County's proposed school bonds have a total amount of $108 million.
  • The county's outstanding bonds total approximately $657 million post-sale, with an Aaa general obligation unlimited tax (GOULT) rating and Aaa issuer rating.
  • The county's available fund balance ratio was 86.5% of annual revenues as of fiscal 2024.
  • The county's liquidity ratio was equally strong at 100.1% of annual revenues as of fiscal 2024.
  • Management projects an increase in the General Fund balance by $20 to $30 million in fiscal 2025.
  • Long-term liabilities are elevated at 219% of fiscal 2024 revenues, and are projected to increase to approximately 234% of annual revenues.

Sources:

  • Moody's Ratings (Moody's) assignment of a Aaa rating to Rutherford County, TN's proposed $108 million General Obligation School Bonds, Series 2025B
  • Moody's Investors Service news release, available at https://ratings.moodys.com/rmc-documents/425429
  • US Cities and Counties methodology, published in July 2024 and available at https://ratings.moodys.com/rmc-documents/425429
  • Rating Methodologies page on https://ratings.moodys.com