Fitch Affirms Texas Permanent School Fund's IFS at 'AAA'.CHICAGO -- Fitch fitch: see polecat. affirms its 'AAA' insurer financial strength (IFS) rating on the Texas Permanent School Fund's (PSF (Print Services Facility) Software from IBM that performs the printer rasterization for IBM's AFP and other page description languages. PSF products are available for IBM mainframes, AS/400 and RS/6000 series and output the IPDS format for IBM printers. ) school bond guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. program. The Rating Outlook is Stable. The PSF helps Texas school districts by guaranteeing local school district bonds. The 'AAA' rating and Stable Outlook primarily reflect the significant amount of PSF resources available to cover unexpected school district defaults, and the low risk of the participating districts, many of which are rated investment grade. As of August 31, 2006, the PSF, with a book value of $19.4 billion in assets, guaranteed $37.8 billion in bonds of 735 Texas school districts. Texas statute currently limits the PSF's guaranteed outstanding bond principal to no more than 2.5 times (x) the book or the market value of the PSF, whichever is less. This leverage ratio cap is conservative relative to other 'AAA' rated municipal credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing entities, such as bond banks and state revolving funds A revolving fund is a fund or account whose income remains available to finance its continuing operations without any fiscal year limitation. Within federal and state governments, law establishes revolving funds. . Legislation is currently pending to allow the State Board of Education (SBOE SBOE Salary Based on Experience SBOE State Board of Education SBOE State Board of Elections SBOE Santa Barbara Orchid Estate (California) ) to increase the Fund's leverage limit to 5x the PSF's book value, provided that any increased limit is consistent with federal laws and does not prevent the program from receiving an 'AAA' rating. If passed, SBOE intends to increase the Fund's capacity by only small increments. Even with an increase in the leverage ratio to the proposed cap, Fitch expects the PSF's 'AAA' insurer financial strength rating would not be threatened. The rating also considers the PSF's investment profile, which is approximately 23% investment in debt, 65% in equities and 12% in alternative investments. Primary investment goals of the fund include growing the PSF's market value to meet the required school district distribution rate while sustaining the market value for the purposes of the guarantee program. An additional investment goal is increasing the corpus available for future distribution to school districts. For 2006, school district distributions totaled $842 million. The PSF was initially established in 1854, and The Texas state constitution includes numerous protections to ensure the PSF will be available to fund education in perpetuity Of endless duration; not subject to termination. The phrase in perpetuity is often used in the grant of an Easement to a utility company. in perpetuity adj. forever, as in one's right to keep the profits from the land in perpetuity. . These protections also act to preserve the credit of the guaranty program. Any draws on the PSF to pay debt service claims must be replaced, with interest, from state funds otherwise payable to the school district. No Texas school district has defaulted on a bond since the Great Depression. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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