OREANDA-NEWS. S&P Global Ratings affirmed its 'A-' long-term rating on Monarch-Chesterfield Levee District, Mo.'s series 2015 levee district refunding bonds, and removed the rating from CreditWatch with negative implications, where it was placed on April 20, 2016. The outlook is stable.

We placed the rating on CreditWatch Negative following the discovery of an error in the application of our criteria. The error was in relation to not applying stress tests as required by our Special-Purpose Districts criteria, published on June 14, 2007. At bond issuance and in subsequent reviews, we determined that the inherent flexibilities in the levy allowed the district to pass certain sensitivity analyses without performing the stress tests. After further clarification, it was determined that there are limitations with respect to the levy which may result in the sensitivity analyses not always being passed.

"The removal from CreditWatch is based on applying the stress tests, and with consideration of other revenue flexibilities, a determination that the 'A-' rating is still accurate and reflective of the credit quality," said S&P Global Ratings credit analyst John Sauter.

We also discontinued our 'BBB+' rating on the district's series 2006B bonds due to the bonds being refunded. Previously, the series 2006B bonds were also on CreditWatch due to the error in application of criteria.

Securing the bonds is a levee tax assessed against all landowners in the district in proportion to the benefits conferred on each parcel of property by an improved flood levee.

The district lies within portions of the cities of Chesterfield and Wildwood, in western St. Louis County, approximately 20 miles west of downtown St. Louis. It spans approximately 5,620 acres, of which 4,722 are protected areas.

"The stable outlook reflects our anticipation that the district will have limited additional debt needs while maintaining good-to-strong value-to-lien (VTL) ratios," added Mr. Sauter. We do not anticipate any significant change in leading taxpayers or revenues available for debt service within the two-year outlook horizon. The strong underlying tax base which is seeing development also supports the outlook, as does the additional revenue and liquidity sources that could be available for temporary debt service support.

We could lower the rating if there is a loss or extended period of delinquencies by any of the major taxpayers that reduces the DSR or other revenue and liquidity sources, or places added debt pressure on non-delinquent taxpayers. Significant lowering of the district's other revenue and liquidity sources could also have a negative rating impact. Conversely, we could raise the rating if there is significant development in the tax base, which reduces concentration and improves VTL ratios.