The County of Buncombe’s Taxable General Obligation Housing Bonds, Series 2024, have received a prestigious AAA long-term rating from KBRA (Kroll Bond Rating Agency). The rating signifies the County’s robust financial profile and its ability to meet its obligations.
The AAA rating reflects the County’s diversified local economy, which is supported by a growing employment base and a strong tax base. Additionally, the County boasts sound financial policies and procedures that maintain strong available governmental reserves and direct liquidity. The manageable fixed cost burden further contributes to the County’s stability. However, KBRA notes that the County’s resident income metrics are only moderate compared to similarly-rated credits.
In addition to the Taxable General Obligation Bonds, KBRA also assigned a AA+ long-term rating to the County’s Limited Obligation Bonds, Series 2024B. These bonds are backed by an annual appropriation pledge, which supports the timely repayment of principal and interest. The rating for the Limited Obligation Bonds is derived from the same factors as the G.O. bonds, while considering the risk of non-appropriation.
The Stable Outlook assigned by KBRA reflects their expectation of continued economic development in Buncombe County, which will contribute to growth and diversity within the County’s economy, employment sector, and tax base. The Outlook also takes into account the County’s conservative financial policies and favorable financial performance.
Factors contributing to the high rating include a growing and diverse tax base, strong ad valorem tax revenues, sound financial policies and procedures, and manageable overall net debt burden. However, the County faces challenges related to moderate dependence on sales tax revenues and lower per capita resident incomes compared to national figures.
While there are no specific factors identified for a potential upgrade, KBRA highlights that a contraction in the County’s taxing base or a significant increase in debt obligations could lead to a downgrade of the rating.
Overall, the County of Buncombe’s Taxable General Obligation Housing Bonds have received a top rating, reflecting the County’s strong financial position and outlook for future growth.
In addition to the favorable rating received by the County of Buncombe’s Taxable General Obligation Housing Bonds, it is important to consider current market trends in the housing bond market. Housing bonds have seen increased demand in recent years due to low interest rates and a strong housing market. This has resulted in a competitive market for housing bonds, with investors seeking higher yields.
Forecasting the future performance of housing bonds is subject to various factors. While the County of Buncombe’s strong financial profile and diversified local economy are positive indicators, it is important to consider potential challenges and controversies associated with the subject. One key challenge is the overall economic climate, as any fluctuations in the economy could impact the demand for housing and subsequently the performance of housing bonds.
Another potential controversy associated with housing bonds is the issue of affordable housing. As housing costs continue to rise, there is increased pressure on local governments to address the affordable housing crisis. This could potentially impact the performance of housing bonds if there is a shift in policy towards increasing affordable housing options, which could lead to changes in funding priorities.
Advantages of investing in housing bonds include the potential for stable income and asset diversification. Housing bonds backed by government entities, such as in the case of the County of Buncombe, can provide a reliable source of income for investors. Additionally, housing bonds can offer diversification benefits as they are not directly tied to the stock market.
However, there are also disadvantages to consider. One disadvantage is the potential for changes in interest rates. If interest rates rise, the value of existing housing bonds may decrease, as investors seek higher yields elsewhere. Additionally, housing bonds are subject to the overall performance of the housing market, which can be volatile.
For more information on housing bonds and related topics, you may visit the following links:
– Bloomberg – Bonds
– Investopedia – Housing Bonds
– Securities Industry and Financial Markets Association – Housing Finance