OREANDA-NEWS. Fitch Ratings has downgraded the short-term rating to 'F1' from 'F1+' assigned to the $100,000,000 City of Colorado Springs (CO) variable rate demand utilities system subordinate lien improvement revenue bonds, series 2005A. The short-term rating action is in connection with: (i) the substitution of the liquidity support provided by Bank of Montreal (rated 'AA-/F1+'; Outlook Stable), acting through its Chicago Branch, in the form of a Standby Bond Purchase Agreement (SBPA), with a substitute SBPA to be issued by Mizuho Bank, LTD., (Mizuho, rated 'A-/F1'; Outlook Stable), acting through its New York Branch; and (ii) the mandatory tender of the bonds, which will occur on Sept. 14, 2015.

KEY RATING DRIVERS:
The short-term 'F1' rating is based on the liquidity support provided by Mizuho, in the form of a substitute SBPA, which has a stated expiration date of Sept. 13, 2019, unless extended or earlier terminated, during the weekly interest rate mode only.

The long-term rating continues to be based on the rating assigned to the bonds, which are supported by a lien on net pledged revenues of the Colorado Springs combined utility system (electric, water, wastewater and gas, rated 'AA', Outlook Stable). The long-term rating reflects a record of good financial performance, with a board policy of debt service coverage of at least 2.0x, steady economic growth and a moderating capital expenditure program. For more information on the long-term rating, see the press release dated Aug. 28, 2015, available on Fitch's website 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 Sept. 13, 2019, the stated expiration date, unless such date is extended; upon conversion to any interest rate mode other than weekly; 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. A mandatory tender of the bonds is scheduled to occur on the SBPA substitution date on Sept. 14, 2015. The remarketing agent for the bonds is Merrill Lynch, Pierce, Fenner & Smith, Incorporated.

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.