Fitch Rates Rhode Island Clean Water Finance Agency Drinking Water SRF 'AAA'.
The 'AAA' rating on the developing DWSRF program reflects strong default tolerance due to sizable reserves and high loan credit quality. DWSRF federal capitalization grants are typically deposited into a reserve fund, which is available to cure loan defaults from the statewide pool of municipal borrowers. After this issue, DWSRF reserves will equal $30.7 million or approximately 26% of outstanding bonds and provide continued bond performance assuming 100% defaults for four years. Nearly 37% of all DWSRF loans could default over the life of the bonds without any interruption in payments to bondholders.
As additional security, the agency could invest its clean water state revolving fund (CWSRF; loan pool program is rated 'AAA' by Fitch) or DWSRF reserves in either pool should any of the borrowers default, which is permitted under the 2004 cross-investment agreement. However, the agency is not legally obligated to use this feature.
As of this issue, the DWSRF portfolio comprises 16 borrowers, which have made general obligation or water utility pledges to back their loans. Overall credit quality is strong, with 95% of all outstanding principal secured by borrowers with public investment grade ratings or loans insured by 'AAA' bond insurance. Pawtucket is the pool's largest borrower representing approximately 46% of the portfolio.
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|Date:||Apr 28, 2008|
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