Fitch Rates Buffalo Fiscal Stability Authority, New York 2007A Bonds 'AA'; Upgrades Revs to 'AA'.NEW YORK New York, state, United States New 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. assigns an 'AA' rating to the Buffalo Fiscal Stability Authority's (BFSA BFSA Blue Force Situational Awareness ) $27.5 million sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. and state aid secured bonds, series 2007A. The bonds are scheduled to price via negotiation with Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. , Inc. on April 26. Bond proceeds will provide funding for capital projects of the City of Buffalo (the city). At this time, Fitch upgrades to 'AA' from 'AA-' the rating on the BFSA's $122.6 million outstanding parity bonds Parity Bond Two or more bond issues with equal rights to bond payments. Notes: Also referred to as "part passu" or "pari passu" bonds, these types of fixed-income securities are commonly issued by municipalities as a way to gather finance capital. , and affirms the 'F1+' rating on $60 million outstanding bond anticipation notes Bond anticipation note (BAN) A short-term debt instrument issued by a state or municipality to borrow against the proceeds of an upcoming bond issue. . The Rating Outlook is Stable. The upgrade to 'AA' reflects the demonstrated effectiveness of the BFSA in assisting in the recent improvement of the fiscal condition of the city. The 'AA' rating incorporates elements of both municipal and structured finance credit analysis. BFSA is a bankruptcy-remote issuer, and the bond structure grants a first-perfected security interest in City of Buffalo and Buffalo School District sales tax revenues as well as state aid of the city. Statutory and contractual covenants prohibit actions by New York State (the state), Erie County Erie County is the name of several counties in the United States:
BFSA was formed to provide a bankruptcy-remote funding vehicle for the city, as well as financial control and oversight functions. BFSA receives the city and school district's share of sales and compensating use taxes authorized by the state and imposed by the county. BFSA also receives all general purpose state aid appropriated by the state as local government assistance for the benefit of the city. Revenues remaining after debt service and BFSA operational costs are remitted to the city. BFSA's bonds are secured by the city and school district's portion of the local sales tax and state aid to the city, which are BFSA's primary assets. The local sales tax is currently levied at a rate of 4.75%-3% for distribution and 1.75% for county purposes. Beginning in 2007 the city will receive an additional $5.9 million of sales tax revenue from the county purpose portion of the sales tax; this sharing agreement is in effect through Feb. 29, 2008 when 1% of the county's 1.75% portion is set to expire. The state, county, and city covenant not to impair bondholder rights as long as authority debt is outstanding. Specifically, the county covenants to maintain the local sales tax rate of 3% through June 13, 2037, when the authority will be disbanded. In addition, any change in the local tax law cannot result in coverage below 2.0 times (x) maximum annual debt service (MADS) on BFSA bonds. Stress tests show that pledged revenues provide very strong coverage. Coverage of estimated MADS for an assumed total debt program of $275 million from 2006 sales tax revenues and 2008 state aid revenues is 7.8x, and coverage from 2006 sales tax receipts alone is a solid 3x. Total BFSA revenues would have to decline 12.54% annually through 2030 to hit the 2x coverage minimum. Given the steady average annual growth of sales tax and state aid revenues since 1990 of 2.5% and 4.9%, respectively, coverage is expected to remain adequate, despite the below-average economic base. The additional bonds test Additional bonds test A test for ensuring that bond issuers can meet the debt service requirements of issuing any new additional bonds. additional bonds test for senior debt is strong, requiring 3x coverage of MADS from sales tax revenues alone. The indenture limits total senior bonds outstanding to $300 million, and the BFSA act limits cash flow notes outstanding to $145 million. 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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