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Fitch Rates Rhode Island Clean Water Finance Agency Drinking Water SRF.

CHICAGO -- Fitch Ratings assigns an 'AAA' rating to the Rhode Island Clean Water Finance Agency's (the agency) $9.5 million safe drinking water revolving fund revenue bonds series 2009A (pooled loan issue). The bonds are expected to price during the week of Oct. 26, 2009 via negotiation. Bond proceeds will be loaned to three borrowers for certain drinking water projects through the safe drinking water state revolving fund (DWSRF). In addition, Fitch affirms the rating on approximately $114.4 million of outstanding DWSRF bonds at 'AAA'. The Rating Outlook is Stable.

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 $30.3 million or approximately 25% of outstanding bonds and provide continued bond performance assuming 83.3% defaults over the next four years.

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 21 borrowers, which have made general obligation or water utility pledges to back their loans. Overall credit quality is strong, with 92% of all outstanding principal secured by borrowers with public investment grade ratings. Pawtucket is the pool's largest borrower representing approximately 39% of the portfolio.

Additional information is available at www.fitchratings.com.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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 ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
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Publication:Business Wire
Geographic Code:1U3IL
Date:Oct 12, 2009
Words:371
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