Arizona Fire & Medical Authority ratings upgraded by Fitch Ratings

Traders Union
All News
Financial News
Arizona Fire & Medical Fitch upgrade

Highlights

Fitch Ratings upgraded Arizona Fire & Medical Authority's Issuer Default Rating to AA+ from AA, citing improved financial resilience and stronger reserves above 20%.
Outstanding taxable series 2021 certificates of participation were raised to AA from AA-, one notch below the IDR due to lease payment appropriation risk.
Rapid economic and demographic growth in Maricopa County supports the AA+ rating, which carries a stable outlook and a model implied rating value of 9.80.

Credit upgrade driven by reserves and liability improvement

As reported by Fitch Ratings, the agency upgraded Arizona Fire & Medical Authority's Issuer Default Rating to AA+ from AA and raised its outstanding taxable series 2021 certificates of participation to AA from AA-. The outlook remains stable.

Fitch says the IDR upgrade reflects financial resilience moving to aaa from aa, supported by a sustained five-year trend of available general fund reserves above the 20% threshold and mid-range budgetary flexibility. The agency also cites a now strong long-term liability burden that has materially improved, driven by growth in market value and helped by the full assumption of the Buckeye Valley Fire District.

The certificates of participation carry a one-notch lower rating than the IDR because of the higher degree of optionality linked to annual appropriation of lease payments. Fitch says the tax-exempt and taxable series 2021 COPs are backed by lease payments received by the trustee from AFMA and secured by various real property assets.

Maricopa County growth supports the rating profile

Fitch also points to the authority's strongest population trend and demographic and economic level metrics, reflecting continued rapid economic growth in Maricopa County. The model implied rating for Arizona Fire & Medical Authority is AA+, with a numerical value of 9.80, at the upper end of the 9.0 to 10.0 range for that rating level.

Potential downside risks to the IDR include a sustained drop in available general fund reserves below 20% of spending, weaker economic and demographic performance such as slower population trends, rising unemployment or lower resident income, and a material sustained increase in long-term liabilities. Fitch says an upgrade from the current IDR level would require roughly a 15% decline in the authority's liabilities metrics, assuming stable financial resilience and personal income levels, while any change in the IDR would also affect the COP ratings.

Our earlier coverage of AM Best’s rating affirmation for Donegal Insurance Group outlined how the insurer kept its Financial Strength Rating and issuer credit ratings unchanged with a stable outlook. We noted that the decision was tied to very strong balance sheet strength, adequate operating performance, and appropriate enterprise risk management—factors that helped reinforce confidence in its overall credit profile.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.