Fitch Rates New Mexico Finance Authority's $34.9MM Sub PPRF Revs 'AA-'.
CHICAGO -- 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 New Mexico Finance Authority's (NMFA NMFA National Military Family Association
NMFA National Master Freight Agreement ) $34.9 million subordinate lien public project revolving fund (PPRF PPRF Patient Privacy Rights Foundation ) revenue bonds, series 2007A. The bonds are expected to price during the week of Jan. 15 via negotiation led by Ramirez & Co. Fitch also affirms the 'AA-' rating on $189.7 million outstanding subordinate lien PPRF revenue bonds and the 'AA' rating on NMFA's $460 million outstanding senior lien PPRF revenue bonds. The Rating Outlook on both the senior and subordinate lien bonds is Stable.
The ratings on the NMFA's PPRF bonds are based on the NMFA's continuing record of conservative loan underwriting criteria, the revenue securing the bonds, the diversification of the loan portfolios 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. Pledged loan repayments and GGRT revenue currently provide 1.4 times (x) maximum annual debt service (MADS) coverage for the senior lien PPRF bonds.
The subordinate lien bonds are secured by the repayments of its separate loan portfolios, the excess cash flows from the senior lien bonds and repayments from a smaller portfolio of direct loans. This cash flow stream currently provides 2.3x MADS coverage on the subordinate bonds, although coverage is expected to decline with future debt issuance.
Proceeds from both senior and subordinate bonds are made to local governments throughout the state of New Mexico, many of which are small and do not have public credit ratings. To date however, there have been no uncured defaults by any of the borrowers in the NMFA's loan portfolios. Both the senior and subordinate liens are subject to an 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 that conservatively discounts historical GGRT receipts and projected pledged revenues based on the credit quality of the loans; this provides protection against the programs becoming overleveraged.
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