Fitch Rates New Mexico Finance Authority's $58.9MM Senior PPRF Revs 'AA'.CHICAGO -- Fitch assigns an 'AA' rating to the New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). Finance Authority's (NMFA NMFA National Military Family Association NMFA National Master Freight Agreement ) $58.9 million 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) public project revolving fund (PPRF PPRF Patient Privacy Rights Foundation ) revenue bonds, series 2006D. The bonds are expected to price during the week of July 24 via negotiation led by Piper Jaffray & Co. In addition, Fitch affirms the 'AA' rating on NMFA's $411.2 million outstanding senior lien PPRF revenue bonds and the 'A+' rating on the $149.8 million outstanding subordinate lien PPRF revenue bonds. The Rating Outlook is Stable. The series 2006D bond proceeds will be used to reimburse PPRF loans made by NMFA to six governmental units in New Mexico acquire and make improvements to New Mexico's Public Employees Retirement Association building, and to refund and restructure a portion of New Mexico's series 2002 State Building Bonds. Due to the timing of board approval for NMFA's PPRF projects, the series 2006D bonds are being issued prior to series 2006C, which are expected to be issued late summer 2006. The 'AA' rating on NMFA's senior lien PPRF bonds is based on the ample revenue securing the bonds, the diversification of the loan portfolio and the sound management of PPRF loan programs. The senior bonds are secured by municipal and state agency loan repayments, as well as NMFA's 75% share of New Mexico governmental gross receipts tax A gross receipts tax, sometimes referred to as a gross excise tax, is a tax on the total gross revenues of a company, regardless of their source. It is similar to a sales tax, but it is levied on the seller of goods or services rather than the consumer. (GGRT GGRT Galloping Goose Rail Trail ) revenues. 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 , which conservatively discounts historical GGRT receipts and projected pledged revenues based on the credit quality of the loans, provide protection against the program becoming too leveraged. To date, there have been no loan defaults within the senior lien loan portfolio. The loan pool consists of 167 borrowers and provides the primary source of senior bond repayment. Approximately 75% of all pledged loans, predominately those of the 10 largest borrowers, are estimated to be investment grade quality by Fitch. Albuquerque Bernaillio County Water Utility Authority (rated 'AA' with a Positive Outlook by Fitch) is the portfolio's largest borrower, representing 20% of the portfolio. The 10 largest borrowers make up 62% of the pool. Underlying loan security provisions are strong, with approximately 75% of the loans in the portfolio secured by general obligation, net system revenue, or GGRT pledges. The pool's loan credit quality is further enhanced by the state's Memorandum of Understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. (MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. ) with NMFA, signed May 1, 2006. Under the MOU, the State agrees to guarantee debt service for any school district pool loans made after July 1, 2003. The loans which are covered under the MOU account for approximately $47 million or 8.7% of the portfolio. GGRT revenues, which are also pledged to senior bondholders, currently add 0.4 times (x) senior debt service coverage. The GGRT revenues, which have grown at 4.8% annually since 1996, are levied on public entities' receipts from personal property, utility service, and recreation admission sales. Combined, senior pledged loan repayments and GGRT revenue currently provide 1.4x maximum annual debt service (MADS) coverage for the senior lien PPRF bonds. The additional bonds test and GGRT overcollateralization (OC) are crucial to the bonds' rating, since NMFA's mission focuses on lending to small entities lacking strong credit characteristics. The 'A+' rating on the subordinate lien bonds is primarily based on OC from excess senior lien GGRT and loan repayments from a separate portfolio. However, additional leveraging and loan repayment performance in the senior lien PPRF program will affect available revenue to the subordinate lien bonds. Loan repayments, senior PPRF program releases, and additional direct pledged loans currently provide 2.6x MADS coverage on the subordinate revolving fund, although this may decrease over time. The 1.0x additional bonds test for future subordinate lien bonds also discounts projected pledged loan revenues based on the same credit quality factors used for the senior lien. 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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