Fitch Rates Connecticut's $250MM Special Tax Obligations '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 Connecticut's (the state) $250 million special tax obligation bonds (transportation infrastructure purposes), 2007 series A. Also, Fitch affirms the 'AA-' on $2.1 billion outstanding parity 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) bonds. The bonds will sell on or about Oct. 9 via negotiation with a syndicate led by Banc of America Securities LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . The bonds mature Aug. 1, 2008-2027, with call provisions yet to be determined. The bonds to be issued are the first since 2005 under Connecticut's multimodal Two or more modes of operation. The term is used to refer to a myriad of functions and conditions in which two or more different methods, processes or forms of delivery are used. On the Web, it refers to asking for something one way and receiving the answer another; for example requesting transportation infrastructure program. Special tax obligation bonds are secured by pledged revenues, including taxes and fees on motor vehicle fuel, used vehicle sales, licenses, oil companies' gross earnings and other transportation-related revenues, deposited to the state transportation fund. The 'AA-' rating reflects solid coverage of debt service by pledged revenues of 2.7x over the forecast period, sound legal provisions including a fully funded debt Funded Debt Long-term debt that matures after more than one year. Notes: This is usually issued as a bond or a long-term note. See also: Bond, Debt, Maturity, Note Funded debt Debt maturing after more than one year. service reserve, conservative forecasting and budgeting, twenty year level debt and programmatic flexibility to slow capital projects as necessary. Offsetting these strengths are large and growing needs for transportation capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. , debt service growth that is faster than pledged revenues, and interdependence with the state's general fund that has led to revenue or cost shifts during periods of state fiscal stress. 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 requires pledged revenues of 2.0x on senior and second lien debt service. Fiscal 2007 unaudited pledged revenues covered senior lien debt service by 3 times (x) and combined senior and second lien debt service by 2.7x. Projected debt service coverage, including current bonds and expected future issuances, falls to 2.5x by fiscal 2012. Revenues in the fund are pledged first to senior lien debt service and the senior reserve account, followed by second lien debt service and the second lien reserve account. Payments for debt service on transportation-related general obligation bonds and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of the departments of transportation and motor vehicles are subordinated. Pledged revenue growth in recent years has been very slow. Motor fuels tax, which constitutes a projected 43% of pledged revenues in fiscal 2007, has grown an average of 1.8% per year over 10 years; collections declined in fiscal 2006 and 2007, reflecting the impact of rising gas prices on consumption. In 2007 the legislature raised the per gallon tax on diesel fuel to $0.37, from $0.25, offset by a reduction in oil companies tax deposited to the fund. Prior legislation guarantees that underperformance in the oil companies' tax will be made up by supplemental general fund transfers. The special transportation fund closed fiscal 2007 with $1.1 billion net revenues and a $193 million closing balance. Debt service of $415 million consumed 38% of revenues. Fiscal 2008 revenues rise 2.6%, to $1.13 billion, with a projected ending balance of $221 million. Going forward, the state projects average annual growth in pledged revenues of 1.9% per year through fiscal year 2012. Ending balances are projected to decline over the forecast period as new debt issuance raises debt service; fiscal 2012 debt service is projected to consume 41% of revenues. At present the state has $2.2 billion in senior lien bonds, and $590 million in second lien bonds (rated 'AAA/F1+' by Fitch based on insurance and credit enhancement) outstanding, with $2.3 billion in authorized but unissued debt prior to this issue. Authorizations have grown substantially in recent years, with the legislature adjusting pledged revenues to support new bonding. In fiscal 2005, $1.3 billion was authorized for expanded transportation capital needs, notably for new rail cars on the Metro North New Haven line Metro-North's New Haven Line runs from New Haven, Connecticut southwest to Woodlawn, New York on the Harlem Line, where New Haven Line trains continue south to Grand Central Terminal in Manhattan. ; the plan was supported by a $1 per ticket surcharge on rail users. In fiscal 2006, the legislature authorized an additional $1 billion, including for commuter rail between New Haven and Springfield, Mass. The legislature shifted additional oil companies tax collections to the special transportation fund to cover the expanded authorization. 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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