Fitch Affirms State of Wisconsin GO Commercial Paper Short-Term Rating at 'F1+'
OREANDA-NEWS. Fitch Ratings has affirmed the Short-term 'F1+' rating assigned to the $275,000,000 State of Wisconsin General Obligation Commercial Paper Notes (notes).
The rating action is in connection with: (i) the substitution of the current credit agreement provided by The Bank of New York Mellon (rated 'AA/F1+'/Stable Outlook) supporting the notes, with a credit agreement provided by BMO Harris Bank N.A. (rated 'AA-/F1+'/Stable Outlook); and (ii) the reoffering of the notes.
KEY RATING DRIVERS
The 'F1+' rating on the notes is based on the support provided by a credit agreement of BMO Harris Bank, which has a stated expiration date of March 15, 2019, unless extended or earlier terminated. The BMO Harris Bank substitute credit agreement covers principal only. The State of Wisconsin remains obligated to pay interest upon maturity of all notes. The State of Wisconsin's Long-term rating is 'AA'/Stable Outlook.
U.S. Bank National Association will continue as the Issuing and Paying Agent for the notes, and as IPA, is directed to request an advance under the substitute credit agreement whenever proceeds of the sale of rollover notes and other funds are insufficient to pay maturing notes. The substitute credit agreement provides sufficient coverage for the principal amount of notes and the issuer is obligated to pay interest on the notes.
All notes will be issued at par, with interest due at maturity. Following the occurrence of an event of default under the credit agreement, BMO Harris Bank may direct the IPA to immediately stop the issuance of any additional notes. In such event, the substitute credit agreement will expire after all the notes supported by it mature and have been paid from funds drawn on it. In addition, the substitute credit agreement may be terminated by BMO Harris Bank upon the occurrence of specified immediate termination events. The dealers for the notes are Goldman, Sachs & Co. and Merrill Lynch Pierce Fenner & Smith, Incorporated and J.P. Morgan Securities LLC.
RATING SENSITIVITIES
The rating reflects the short-term rating that Fitch maintains on the substitute bank providing liquidity support and will be adjusted upward or downward in conjunction with changes to the short-term rating of the bank and in some cases, the long-term rating of the State of Wisconsin.
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