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Fitch Rates Riverside, California's $60MM Var-Rate Rfdg Water Revs 'AA/F1+'
NEW YORK-(Business Wire)-May 6, 2008 - Fitch Ratings assigns a rating of 'AA/F1+' to the $60,300,000 City of Riverside, California (the city) variable-rate refunding water revenue bonds issue of 2008A. The 'AA' long-term rating, which was initially assigned on April 28, 2008, reflects the credit quality of the city. The 'F1+' short-term rating is based on the standby bond purchase agreement (SBPA) issued by Bank of America, N.A.
The city's 'AA' long term rating is based on strong financial performance, solid debt service coverage and liquidity levels, competitive water rates, and economic growth, despite the current slowdown. In addition, the city benefits from a plentiful local groundwater supply, which limits demand for imported water from the region's wholesale provider to about 3% of total demand. The rating also reflects the system's sizeable capital improvement plan that is expected to be predominantly debt funded. The SBPA provides for the payment of the purchase price of tendered bonds during the weekly and daily rate modes in the event the proceeds of a remarketing of the bonds following a tender are insufficient to pay the purchase price. The SBPA is sized to cover 34 days of interest calculated at the maximum rate of 12% per annum, based on a 365-day year. The short-term rating will expire on the earlier of: May 13, 2011, the expiration date of the SBPA unless such date is extended or earlier termination of the SBPA in accordance with its terms. The remarketing agent for the bonds is Banc of America Securities LLC. The bonds are expected to be delivered on or about May 13, 2008.
The bonds may be converted to a daily, bond interest term, auction, or long term interest rate mode. While bonds bear interest in the weekly and daily rate modes, interest is payable on the first business day of each month. Holders have the option to tender their bonds for purchase with prior notice while the bonds bear interest in a weekly or daily rate mode.
The bonds are subject to mandatory tender on an interest mode conversion date; on the effective date of an alternate liquidity facility; on the upon the fifth business day preceding any expiration or termination of the SBPA other than as a result of a mandatory standby tender; and for a mandatory standby tender on the business day prior to the termination date as stated in such notice from the bank. The bonds are also subject to optional and mandatory redemption.
Bonds proceeds will be used to (i) refund the outstanding principal amount of the 2005 Bonds, and (ii) fund the 2008A reserve account.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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