Fitch Downgrades Louisiana Transp Auth Rev Bnds to 'BBB+', Negative Watch; 'A+' BANs Remain on Watch.NEW YORK New York, state, United StatesNew York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. downgrades the following Louisiana Transportation Authority bonds (LTA LTA Land Transport Authority LTA Land Trust Alliance LTA Lawn Tennis Association LTA Lost Time Accident LTA Lighter-Than-Air LTA Lieutenant (Singapore military) LTA Lipoteichoic Acid LTA Lymphotoxin-Alpha ) to 'BBB+' from 'A-': -- -$78.4 million in outstanding LA 1 project senior lien senior lien n. the first security interest (lien or claim) placed upon property at a time before other liens, which are called "junior" liens. (See: mortgage, deed of trust, lien, UCC-1) toll revenues bonds, series 2005A; -- $16.3 million in outstanding LA 1 project senior lien toll revenue capital appreciation bonds, series 2005B. The bonds remain on Rating Watch Negative. In addition, Fitch's 'A+' rating on the authority's $66 million in LA 1 project subordinate lien toll revenue bond Toll Revenue Bond A type of municipal bond used to build a public project such as a bridge, tunnel or expressway. The bond is repaid with revenues from tolls paid by users of the public project in question. anticipation notes (BANs), series 2005, remains on Rating Watch Negative. Fitch's downgrade of the senior lien bonds and the Rating Watch Negative on both the senior lien bonds and subordinate lien BANs reflect the economic uncertainties and the financial pressures facing the State of Louisiana CODE, OF LOUISIANA. In 1822, Peter Derbigny, Edward Livingston, and Moreau Lislet, were selected by the legislature to revise and amend the civil code, and to add to it such laws still in force as were not included therein. , which provides 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 and financial support to the project, and growing risks regarding the LA 1 project's cost and scheduled opening. The rating actions on the senior lien bonds and subordinate lien BANs follow Fitch's downgrade today of the State of Louisiana's general obligation bonds to 'A' from 'A+' with a Rating Watch Negative, and maintenance of the Rating Watch Negative on the 'A+' for the state's gasoline and fuels tax revenue bonds. The future rating direction for the senior lien bonds and subordinate lien BANs will be based on the near-term economic and financial condition of the state and the resolution of pending LA 1 Phase I project cost and implementation issues In the Business world, companies frequently set-up a connection between which they transfer data. When the connection is being set-up, it is referred to as implementation. When issues occur during this phase, they are known as implementation issues. . Fitch's 'BBB+' and Rating Watch Negative on the senior lien bonds, which are secured by toll revenues of the LA 1 Phase I project and by the state's commitment, subject to legislative appropriation to refill draws on the senior lien debt service reserve fund, reflect the economic strength and monopoly position of the project once built, the importance of commercial activity at Port Fourchon to the economic health of the state, and the concentration of traffic demand that is largely dependent upon Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east oil and gas activity. The rating also considers the state's financial commitment within a challenging project implementation, economic, and financial environment. The 'A+' and Rating Watch Negative by Fitch on the subordinate lien BANs is based on the expectation that, in spite of increasing financial pressures and project uncertainties, the authority and the Department of Transportation and Development (DOTD DOTD Department of Transportation and Development (Louisiana) DOTD Dawn of the Dead (movie) DOTD Day of the Dead (movie) DOTD Deal of the Day ), serving as the LTA's agent for the project, will continue to meet the requirements of a secured loan agreement between the authority and the U.S. Department of Transportation (USDOT USDOT United States Department of Transportation ). Disbursements under a Transportation Infrastructure Finance and Innovation Act (TIFIA TIFIA Transportation Infrastructure Finance and Innovation Act ) loan are expected to take out the BANs on or before Sept. 1, 2009. Construction risk has been manifested. However, the flexibility built into the secured loan agreement to amend the completion date and defer a development default remains a mitigating factor. In its evaluation, Fitch considers the authority and DOTD's financial wherewithal and ability to meet the terms of the secured loan agreement. The 'A+' rating and Rating Watch Negative on the gasoline and fuels tax revenue bonds is therefore a key rating factor for the subordinate lien BANs. Prior to hurricanes Katrina and Rita, the LTA and DOTD were contending with construction cost bids for the project that were $100 million, or 65% higher than expected. The department is required, subject to legislative appropriation, to fund construction cost overruns. Near-term hurricane-related damage at Port Fourchon is not expected to materially affect expected medium- to long-term traffic demand. To manage project cost pressures, DOTD has divided the project into three phases, revised some project features, and extended the period of construction. The department has begun to advertise the project phases and expects to receive all bids by the end of February 2006. Under this strategy, project costs may be greater than the original plan of finance. While DOTD's plan to fund potential additional project costs with federal transportation funds demonstrates its commitment to the project, the possibility exists that the construction cost bids may come in still higher than expected and place additional financial pressure on the authority, the department, and the state to find a funding solution. With toll collection now expected Dec. 1, 2009, which is the last day of capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. on the senior lien bonds and 15 months later than initially expected, the authority is, at this early stage, using all of the construction risk mitigation provided by the capitalized interest period and will lose more than a year of toll revenue. Any additional project delays would likely require the authority to draw on the senior lien debt service reserve fund and request the state to replenish it, subject to legislative appropriation. While the subordinate lien BAN's Sept 1, 2009 maturity date is now prior to the start of toll collection, Fitch expects the LTA to draw on the TIFIA loan to take out the subordinate lien BANs at or prior to their maturity, given permitted flexibility within the secured loan agreement and the expectation that the authority and USDOT will work cooperatively toward the substantial completion of the project. Nevertheless, disbursements under the TIFIA loan are dependent upon the authority's ability to perform, which may be further pressured if additional cost increases and/or schedule delays materialize. Phase I of the LA 1 project encompasses a tolled, high-level span two-lane bridge crossing Bayou LaFourche Bayou Lafourche is a bayou in southeastern Louisiana, United States, that flows into the Gulf of Mexico. The first settlements of Acadians in southern Louisiana were near Bayou Lafourche and Bayou des Ecores which led to a close association of the bayou with Cajun culture. in Leeville, LA, and a connecting elevated two-lane road extending south to LA 3090 near Port Fourchon. The LTA is a public corporation, created by the Louisiana legislature and placed within the DOTD. It is responsible for developing, constructing, improving, expanding, and maintaining an intermodal transportation system within the state. The DOTD is a corporate body responsible for developing and implementing programs to ensure an adequate, safe, and efficient statewide transportation network. 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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