Thursday, September 13, 2018

Moody's Downgrades Jackson Debt

Editorial Note:  Folks, this is a big deal.  What just took place is that Jackson's bond rating was lowered to one grade above junk status, er, I mean speculative grade status.  There is no more "cushion" for Jackson in terms of its bond rating. 


Moody's Rating Service issued the following press release.

New York, September 10, 2018 -- Moody's Investors Service has downgraded the City of Jackson, MS general obligation rating to Baa3 from Baa2. Concurrently, we have downgraded to Ba1 from Baa3 the rating on the Special Obligation Bonds, Series 2011A&B issued by the Jackson Redevelopment Authority but secured by an unconditional pledge of the city's general fund. The outlook remains negative.

RATINGS RATIONALE

The downgrade reflects the city's support of and exposure to the stressed City of Jackson Water and Sewer Enterprise (Ba2 negative), which required an emergency loan from the city's general fund in order to meet the system's September 1 debt service payment. The rating also incorporates the city's stabilizing financial position after a multi-year period of financial narrowing. The rating considers Jackson's robust and stable tax base that serves as the capital of the State of Mississippi (Aa2 negative), its low wealth and income indicators of residents, and the city's elevated debt and pension burdens.

The Ba1 rating on the city's outstanding Series 2011A and 2011B bonds reflects the more limited source of repayment for the bonds, which are secured by an unconditional and irrevocable pledge of the city's general fund.

RATING OUTLOOK

The negative outlook reflects our expectation that the city will remain exposed to its financially stressed water and sewer enterprise system. We expect the city's water and sewer system to be pressured operationally and financially in the near term and challenged by significant capital needs over the long term. The negative outlook reflects the significant ongoing operational and financial risk posed to the city's general governmental operations by its water and sewer enterprise.

The negative outlook further reflects the growing debt service of the city through fiscal year 2020.

FACTORS THAT COULD LEAD TO AN UPGRADE

Continued stabilization of financial position despite near-term escalation of debt service

Strengthened operational and financial position of water and sewer enterprise, reducing potential risk to the city's general fund

Elimination of governmental support for enterprise operations

Reduction of debt and pension burdens

Material expansion of taxable base

FACTORS THAT COULD LEAD TO A DOWNGRADE

Continued support of enterprise operations

Erosion of financial reserves or liquidity

Material growth to debt or pension burdens

Deterioration of taxable base

LEGAL SECURITY

The general obligation bonds are secured by an annual ad valorem tax, levied against all taxable property in the city without legal limitation as to rate or amount.

Series 2011 A and B bonds are an unconditional, irrevocable obligation of the city's general fund per a contribution agreement with the Jackson Redevelopment Authority.

USE OF PROCEEDS

Not applicable

PROFILE

The City of Jackson is located in central Mississippi and serves as the state capital and the county seat for Hinds County (Aa3).

METHODOLOGY

The principal methodology used in the general obligation ratings was US Local Government General Obligation Debt published in December 2016. The principal methodology used in the lease ratings was Lease, Appropriation, Moral Obligation and Comparable Debt of US State and Local Governments published in July 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Joseph Manoleas
Lead Analyst
Regional PFG Northeast
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Dan Seymour
Additional Contact
Rtgs And Proc Ovsght
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

32 comments:

Anonymous said...

Would you own the City of Jackson any of your money?

Anonymous said...

No one in their right mind would buy a Jackson bond no matter how high the rate of interest.

Anonymous said...

I don't fully understand all the terms and ratings in this report, but it appears that things aren't too rosy for Jackson's financial future.

Anonymous said...

Taxable base deteriorates more every single day.

Anonymous said...

What is the definition in their mind of an "enterprise operation"?

Anonymous said...

But Mayor Chockbaby thinks he needs an additional 300,000 for public relations spending in his office!

Time for the City to realize it needs to get hold of its spending for all the unnecessary cap and focus on the real priorities - infrastructure, police, fire. Quit spending on these wonderful social experiments, zoos, multiple libraries, golf courses, private group museums. Keep the focus on the necessity, not the radical or the nice. But - that won't happen. Another downgrade coming soon.

Anonymous said...

Lead Analyst Joseph Manoleas ... I wonder what he thought when he was compiling the numbers for Jackson from his office in New York.

Anonymous said...

The city's remedy will be to sell some more bonds.

Anonymous said...

11:46 - You can 'compile numbers' from any location on the planet. You don't have to be in the hood to come up with this report.

Meanwhile: Will one of you armchair money-managers please tell us which of these solutions is anywhere near possible for the city of Jackson?

"FACTORS THAT COULD LEAD TO AN UPGRADE

Continued stabilization of financial position despite near-term escalation of debt service. (Find a pot of gold at the end of a rainbow).

Strengthened operational and financial position of water and sewer enterprise, reducing potential risk to the city's general fund. (Magically transform all the unpaid water bills into cash)

Elimination of governmental support for enterprise operations. (Close the fucking zoo and eliminate the city employment office)

Reduction of debt and pension burdens. (Pay off some bills and lay off some fat)

Material expansion of taxable base. (Import some working people into the city and require that they buy property)

Anonymous said...

I can't think of ANYTHING that's been upgraded in Jackson in last 5-10 years?

Yeti Life Salt Coolers said...

Maybe the city should start selling timber futures. So what if they're fake? All you get is a slap on the wrist, a few months confined to your JCC/CCJ home, and a single charge of fraud.

Anonymous said...

@ September 13, 2018 at 12:30 PM

Well said!

Ashby Foote made a post on Facebook asking his constituents what can be done to address the obesity issue in Mississippi, what can be done in NE Jackson.

The level of doom gloom was out of control.

Once again, people on here showing why Mississippi is ranked at the bottom of everything. Too many people want to complain, not enough wanting to do anything to solve the problems around here. SMH

Anonymous said...

1230 - Enterprise operations are those that raise money for their operation, specifically the water/sewer dept. The golf courses and a few other operations mat be included but they are so mnor it's not much of a drop in a big hucket. Not to say quitting subsidizing of things like the zoo would be a good start, just in a different category.

My answer to your (possibly rhetorical) question is the 2nd - collections at the water/sewer department. No way all the past dues will be collected but over the next two years I do expect to see this operation back on track. (Otherwise, the city will have to be shut down and taken over - which may be required anyway.) With the billing system finally straightened out and a reasonable collection policy in place, I have hope that one is possible. I see little hope for the others ever happenong.

Anonymous said...

We just needs to borrow some mo money and fix up dem houses around dat zoo.

Anonymous said...

Just a guess here...........I think the tax base WILL continue to deteriate.

Anonymous said...

The sale of water is a money maker every place in the world except for Jackson.

Anonymous said...

Actually, no 451. Many public utility systems are going broke, and selling out to private companies. You would think that they would be automatic money makers for cities but that omits the fact that they too often are being run as governmental units, not as the businesses that they should be. Local politics can ruin the best of them.

Water Dept Expects To Earn Profit.. said...

"No way all the past dues will be collected but over the next two years I do expect to see this operation back on track."

2:27....will you please take a deep breath and give us one thing that leads you to that conclusion? When a train jumps the track and runs in the ditch, there has to be some reason to suspect it might right itself and run properly 'over the next two years'.

Anonymous said...

@4:51

You are wrong. The sale of water IS a money maker in Jackson...for Kroger, Walmart etc...

Anonymous said...

I have a multi-faceted solution:

Shove the entire Jackson metro area into the Rez. Solves the City of Jackson problem, the salvinia threat, the damned dam situation, the zoo problem, the JPS problem, the water and sewer problem, the pothole problem, the Taterhood Parkway problem, the legislature problem, etc., etc., etc.

Anonymous said...

Kenny Stokes is already on TV complaining that it is unfair to collect from the
poor people and that the City should not turn anyone’s water off for non-payment.
Anyone who thinks the City will collect or turn anyone’s water off is dilutional.
Jackson is a dying city.

Anonymous said...

5:48, the city finally has put someone in charge of that facility that knows how to run a business, is not a political hack, and realizes the necessity of actually attacking the problem rather than ignoring it. And, I believe, that the Mayor and a majority of the Council, recognize that although they might not like it, their political lives revolves on him being successful in doing this.

AND, a great many of the past dues are owed by people that are actually willing and able to pay the bill - once they receive it. Others will have the choice of moving or having their water cut off.

That's why I'm led to that conclusion - and I didn't need a very deep breath to get there.

Anonymous said...

852, Kennuf can complain all he wants - the city has no choice except to implement the shutoff policy to meet their loan covenants. Kennuf can play to his constituents all he wants, he doesn't have the power or votes on the council to stop it.

Anonymous said...

When I go to Walmart or Kroger- they always make me pay the whole bill- not just part of it.

Anonymous said...

Now we know the reason the city was in such of a big hurry to pass the recent bond issue which couldn't wait until the next statewide voting date. I am sure the holders of those bonds would love to get their ill-fated investments back.

Anonymous said...

1044, your theory may be correct, but your fact is not. Passing the bond issue does not equate to selling the bonds. Haven't checked on it, but I would bet a stack of timber contracts that those JPS bonds have not been issued or sold yet.

Anonymous said...


NOTHING in the loan covenants demands the specific act of individual customer water shutoff.

Anonymous said...

1:00, do you know which 'loan covenants' are being referenced? I believe a little investigation may prove you to be in error.

Anonymous said...

The problem is that many residents run up a high water bill and then go back to the water department and opens a new account in a different name.

Anonymous said...

Prove it 4:35 PM.

Anonymous said...

Jackson, MS is a fine example of why a Democracy cannot last. As soon as its citizens become dumbed down enough to elect a Chokwe Lumumba, they bankrupt it!

Anonymous said...

I haven't read Jackson's loan agreements, but I do work at a central Mississippi water provider and can tell you that our loan documents absolutely require that we have a policy and procedure for cutting off nonpayers.

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Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

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This is definitely a Beaver production.


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Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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