OREANDA-NEWS. S&P Global Ratings raised its long-term and underlying ratings to 'A' from 'A-' on the Los Angeles Community Redevelopment Financing Authority, Calif.'s series 2008P taxable pooled financing bonds, issued for the Vermont/Manchester and Mid-City CD 10 redevelopment project areas. The outlook is stable.

"The rating actions reflect our view of the stronger maximum annual debt service coverage provided by pledged revenues due to continued growth in the project area's assessed value (AV)," said S&P Global Ratings credit analyst Li Yang, "as well as the refunding of parity-lien debt resulting in lower debt service payments for the parity liens."

The 2008P authority bonds are secured by separate loan payments to the Los Angeles Community Redevelopment Financing Authority by the Los Angeles Community Redevelopment Agency, pursuant to three loan agreements. The loan payments are secured by a senior lien on tax-increment revenues, including the housing set-aside generated from three project areas: Pico Union 2, Mid-City CD 10, and Vermont/Manchester. Because there is no cross-collateralization on the pledged revenue streams, the bonds are rated based on the weakest link of the project areas. We note that the authority plans to refund the Pico Union 2 loan agreement and the 2013C bonds will only be secured by the remaining two loan agreements from Mid-City and Vermont/Manchester. Of these two remaining project areas, we believe the Vermont/Manchester to be of lesser credit quality.

The Vermont/Manchester recovery redevelopment project area comprises 163 acres 10 miles southwest of downtown Los Angeles. The Mid-City recovery redevelopment project area comprises 725 acres west of downtown Los Angeles.

"The stable outlook reflects our view of the project area's historical stability and recent AV growth," added Mr. Yang, "as well as our opinion of the agency's cash flow post-diss7olution and limited ability to issue additional debt."

We could raise the ratings in the next two years should the AV of the combined project areas continue to grow at rates similar to those seen in the past three, bringing coverage to levels above those of similarly rated peers. Conversely, we do not expect to lower the ratings in the next two years, but could do so should coverage on the bonds fall below levels comparable with those of similarly rated peers for any reason, including significant declines in AV or loss of major taxpayers.