Fitch Affirms Utah Water Fin Agency (Central UT Wtr Conservancy Dist) Ser B-2 Revs' S-T Rtg at 'F1'
OREANDA-NEWS. Fitch Ratings has affirmed the short-term 'F1+' rating on the Utah Water Finance Agency program revenue bonds (Central Utah Conservancy District) variable rate demand bonds series B-2.
The short-term rating action is in connection with: (i) the substitution of the liquidity support provided by JPMorgan Chase Bank, National Association (rated 'AA-/F1+'/Stable Outlook) in the form of a Standby Bond Purchase Agreement (SBPA), with a substitute SBPA to be issued by Landesbank Hessen-Thuringen Girozentrale (Helaba, rated 'A+/F1+'/Stable Outlook; and (ii) the mandatory tender of the bonds, which occurred on May 18, 2016.
KEY RATING DRIVERS:
The short-term 'F1+' rating is based on the liquidity support provided by Helaba in the form of a substitute SBPA, which has a stated expiration date of May 18, 2021, unless extended or earlier terminated, during the weekly interest rate mode only. The long-term 'AA+' rating continues to be based on the rating assigned to the bonds. The Rating Outlook is Stable for the long-term rating. For more information on the long-term rating, see 'Fitch Affirms Central Utah Water Conservancy Dist, UT Water Rev Bonds; Outlook Stable', dated Oct. 3, 2014 and available at www.fitchratings.com.
The substitute SBPA provides for the payment of the principal component of purchase price plus an amount equal to 35 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the weekly rate mode in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The substitute SBPA will expire on May 18, 2021, the stated expiration date, unless such date is extended; upon conversion to a daily, commercial paper, or long term rate mode; or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of the bonds which result in an automatic and immediate termination. The remarketing agent for the bonds is George K. Baum & Company.
RATING SENSITIVITIES
The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bonds. The long-term rating is exclusively tied to the creditworthiness of the bonds and will reflect all changes to that rating.
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