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Fitch Rates Dist. of Columbia Series 2003D GOs 'A+'; Outlook Stable
NEW YORK-(Business Wire)-October 3, 2008 - Fitch Ratings has assigned a long-term underlying rating of 'A+' to bank bonds corresponding to the District of Columbia's multimodal general obligation (GO) bonds, series 2003D. The Rating Outlook is Stable.
Variable-rate debt represents approximately 28% of the District's overall debt profile, with approximately half of that amount hedged. Approximately $35 million (or approximately 3%) of the District's total variable-rate debt, across all series of District variable-rate GO bonds are currently held as bank bonds. Fitch believes the District's interest rate and term-out risk is low, given the expectation of favorable access to long-term capital when debt markets stabilize, and maintenance of sufficient reserves to accommodate any likely increase in interest requirements in the near term.
The 'A+' rating reflects the district's consistently strong financial results and build-up of sizeable reserves, high resident wealth levels, strong property tax base growth in the past few years, and steadily growing economy. The district's strong financial management practices contribute to its ability to control expenditures, and conservative budgeting has resulted in sizable general fund operating surpluses in recent fiscal years even while allotting significant reserves for pay-as-you-go capital and funding its other post employment benefits (OPEB) obligation. The rating also incorporates Fitch's concerns about the district's high debt ratios, which are expected to increase given large capital plans as well as the uncertainty in the real estate market.
For more on the District's general credit, see Fitch's latest report on the District dated Aug. 11, 2008, available on the Fitch Ratings web site at www.fitchratings.com.
Note: Fitch issued an exposure draft on July 31 proposing a recalibration of tax-supported and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research 'Exposure Draft: Reassessment of the Municipal Ratings Framework').
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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