OREANDA-NEWS. Fitch Ratings has affirmed the 'F1+' rating on Georgia Transmission Corporation's (GTC, or the corporation) $275 million commercial paper (CP) program.

SECURITY

The CP notes are general unsecured obligations of GTC.

KEY RATING DRIVERS

SOUND LONG-TERM RATING AND LIQUIDITY: GTC's 'AA-' long-term credit rating (senior secured obligations) and internal liquidity sources support the 'F1+' rating on its CP program.

SOLID COVERAGE: Total internal liquidity resources provide sufficient coverage of maximum potential requirements, in excess of Fitch's 125% threshold. A $275 million revolving credit agreement led by National Rural Utilities Cooperative Finance Corporation (CFC; rated 'A'/'F1' by Fitch Ratings) matches the maximum size of GTC's CP program.

CRITICAL SERVICE PROVIDER: GTC's more than $2 billion of total assets and participation in the state's Integrated Transmission System make its transmission network an essential part of the Georgia electric power infrastructure.

SOUND LONG-TERM CREDIT CHARACTERISTICS: Take-or-pay, joint and several transmission service agreements with its member cooperatives extend through December 2060, providing GTC with a reliable revenue stream for the long-term. In addition, substantially all of GTC's revenue requirements are based on predictable, fixed-cost expenses and revenues are not dependent upon usage.

RATING SENSITIVITIES

OVERALL STABILITY BENEFITS RATING: The strength and stability of its long-term credit rating, coupled with its various liquidity sources, should continue to support the 'F1+' on GTC's CP program.

CREDIT PROFILE

GTC uses its commercial paper program for interim financing of construction projects. As of Dec. 31, 2015, GTC had $177 million of commercial paper notes outstanding.

AMPLE LIQUIDITY SOURCES

A CFC-led, $275 million revolving credit agreement, coupled with GTC's unrestricted cash and an additional $250 million CoBank-led revolver, provide more than Fitch's expected coverage metric of 125% of the maximum size of the CP program. The CFC- and CoBank-led revolvers are for general corporate purposes. However, in practice GTC limits total draws by the amount of outstanding CP notes. Board resolution limits the size of the CP program to the amount of outstanding liquidity facilities. GTC's goal is to maintain adequate financial support for the program at all times.

The CFC-led $275 million revolver extends through Nov. 29, 2018. At that time, the commitment amount declines as two banks exit the agreement and GTC has a $240 million commitment through Nov. 29, 2020. The $250 million CoBank-led revolver extends through Dec. 6, 2018. Events of default under the CFC-led revolver include material members representing greater than 20% of gross operating revenues and subsidiaries, of which GTC has neither.

LIQUIDATION PROCEDURES PLAN

GTC has developed a liquidation procedures plan that broadly outlines how the corporation would manage a failed roll over of CP notes. Fitch views favorably the maintenance of such procedures to ensure the proper redemption of maturing CP.

The plan draws from bank authorizations, incumbency certificates, and related agreements to specify the timing of funding sequences and authorized personnel.

BROAD TRANSMISSION PROVIDER

GTC is a not-for-profit corporation providing transmission services to 38 of 41 distribution cooperatives in Georgia and to Oglethorpe Power Corporation (OPC). GTC's member corporations provide electric distribution to a combined 1.8 million customers, or approximately 4.2 million people, across most of the state.

GTC began operations in 1997 when OPC was divided into three separate entities. GTC became owner of the transmission assets, providing transmission service to its members; OPC retained control of power generation; and Georgia System Operations assumed responsibility for system operations.

For more information on GTC's 'AA-' long-term credit rating, see Fitch's press release dated April 16, 2015.