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Fitch Rates $26.6MM Utah Water Finance Agency Series B Program Revs 'AA-/F1+'
NEW YORK-(Business Wire)-June 18, 2008 - Fitch Ratings assigns a rating of 'AA-/F1+' to the $26,600,000 Utah Water Finance Agency series B program revenue bonds (variable rate demand bonds) series B-4 (the Bonds) issued on behalf of the Central Utah Water Conservancy District (the District). The long-term 'AA-' rating on the bonds is based on district's combined pledge of electric revenues and subordinate pledge of water revenues. The Rating Outlook is Stable. The 'F1+' short-term rating is based on liquidity support provided by JPMorgan Chase Bank, National Association in the form of a Standby Bond Purchase Agreement (SBPA).
The long-term 'AA-' rating reflects the combined pledge of electric revenues and a subordinate pledge of the district's water revenues. The rating is based on the strength of the district's water revenues since electric revenues will vary with water flows and project operations. The district is a long-established entity with strong management and extensive experience in working closely with federal and state governments to construct, operate, and manage water supplies for a growing population across ten counties. The district has covenanted to pay operations and maintenance costs from ad valorem property tax revenues. Pledged revenues from the water system are projected to ensure debt service coverage for all outstanding indebtedness, including the series B-4 bonds if needed, is around 2 times (x).
The short-term 'F1+' rating on the bonds is based on the liquidity support of a SBPA provided by JPMorgan Chase Bank, National Association. The SBPA provides for the payment of the purchase price of tendered bonds during the daily and weekly rate modes in the event the proceeds of a remarketing of the bonds following an optional or mandatory tender are insufficient to pay the purchase price. The SBPA is sized to provide for the entire principal amount of the bonds, plus interest coverage of 35 days calculated at a maximum interest rate of 12%, based on a year of 365 days. The SBPA will expire on June 25, 2009 unless such date is extended, or upon the occurrence of other events of termination, all in accordance with its terms. Fitch's short-term rating expires on the expiration or termination of the SBPA. George K. Baum & Company is the underwriter and remarketing agent for the bonds. The bonds are expected to be available for delivery on or about June 26, 2008.
The bonds will be issued in the weekly interest rate mode and may be converted to a daily rate, a commercial paper rate, a long-term rate, or a fixed rate mode. While the bonds bear interest in the weekly rate mode interest will be paid on the first business day of each calendar month. Holders of bonds bearing interest in the weekly rate or daily rate modes may tender their bonds for purchase with prior notice.
Bonds are subject to purchase in lieu of redemptions: (1) on the effective date of any change in the interest rate mode; (2) on the business day prior to any expiration, termination or substitution of the SBPA; (3) on the first day of any new long-term period; and (4) on each interest payment date while the bonds are in Commercial Paper mode. Optional and mandatory redemption provisions also apply to the bonds pursuant to the terms of the documents
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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