Fitch Rates Summit County Port Authority, Ohio Bond Fund Revs 'BBB+'.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 a 'BBB+' rating to the Summit County Port Authority, OH's (bond fund program) $2,130,000 taxable development revenue bonds, series 2006A (Lockheed Martin For the former company, see . Lockheed Martin (NYSE: LMT) is a leading multinational aerospace manufacturer and advanced technology company formed in 1995 by the merger of Lockheed Corporation with Martin Marietta. Corporation Project). The series 2006A (the bonds) will be offered by Robert W. Baird Robert Wilson Baird (born April 1, 1883) helped found the financial services firm that bears his name and led it for more than 40 years. Baird’s father was a professor of Greek literature at Northwestern University in Evanston, Illinois, where Baird grew up. & Co. Inc. during the week of Jan. 16. Fitch also affirms the 'BBB+' rating on the authority's $23.1 million outstanding bond fund development revenue bonds. The Rating Outlook is Stable. The 'BBB+' rating reflects the sound structure of the bond fund, program reserve requirements Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank. that provide liquidity and first-loss protection to meet bond payments in the event of a default by the authority or future program participants, and formal loan underwriting criteria, which are expected to allow the bond fund to develop and maintain a loan portfolio whose credit profile meets the requirements of the fund rating. The bond fund, which was established under a basic trust indenture dated July 1, 2004 between Summit County Port Authority (the authority) and U.S. Bank National Association (the trustee), exists to promote economic development primarily in Summit County, Ohio Summit County is a urban county located in the state of Ohio, United States. As of the 2000 census, the population was 542,899. Its county seat is Akron6. It is named because the highest elevation on the Ohio and Erie Canal was located here. by loaning revenue bond proceeds to small- and medium-sized commercial and industrial enterprises. By entering into cooperative agreements with governmental entities, the authority can also make loans for the bond fund in various counties throughout the state. Bondholders of the current series and future bond series issued under the basic trust indenture will have a pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. claim against all funds created under the indenture including, among other funds, the revenue fund, into which borrowers will make monthly loan repayments, the primary and program reserve funds, and the collateral fund. The bond documents require the establishment of a primary reserve fund for each series of bonds equal to at least 10% of the original par amount of the loan. Lockheed Martin Corporation, which is the contracting party, will meet this requirement from bond proceeds. In addition to the primary reserves provided by the borrowers, totaling approximately $2.5 million with this issue, the bond fund maintains program reserves totaling $10 million: a $3 million county grant received in February 2001; a $2 million state grant received in April 2001; and a $5 million irrevocable letter of credit Irrevocable letter of credit Assurance of funds issued by a bank that cannot be canceled or amended without the beneficiary's approval. (LOC LOC - lines of code ). The LOC will expire on Sept. 15, 2009 and is subject to one-year extensions. The LOC provides the bond fund with a revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. that supplements the primary and other program reserves. The bank's lien on bond fund collateral is subordinate to bondholders. After this issue, the primary and program reserves will equal 0.50 times (x) total outstanding bonds, which provide sufficient cushion to offset potential loan repayment delinquencies or default by the authority. The authority is expected to maintain at least 40% of aggregate primary and program reserves to total outstanding bonds until the bond fund attains at least 10 participants. Currently, there are eight participants in the portfolio. As the authority issues additional bonds, it is anticipated that the reserves will be leveraged but with the objective of maintaining the 'BBB+' rating on the bond fund. The authority has adopted formal underwriting criteria for bond fund borrowers, which consider purpose for the project, current and historical financial strength of the borrower, knowledge and experience of management, and the source and plan of loan repayment. The underwriting criteria also include debt service coverage, leverage, and liquidity and collateral requirements. Located in northeastern Ohio, Summit County's (general obligation bonds rated 'AA' by Fitch) growing service sector and reputation as a leading research and development center for the polymer industry continues to generate residential investment and high per capita income Noun 1. per capita income - the total national income divided by the number of people in the nation income - the financial gain (earned or unearned) accruing over a given period of time levels. The increasing diversification of the county's economy provides more employment opportunities and improves the overall attractiveness of the area. Bond proceeds will be used to finance equipment to be leased by the authority to Lockheed Martin in connection with its contract to design, engineer, and manufacture high altitude Conventionally, an altitude above 10,000 meters (33,000 feet). See also altitude. airships, which was awarded to the contracting party by the U.S. Department of Defense. The equipment will be located at a Lockheed Martin facility in Akron, Ohio. Lease payments from Lockheed Martin will secure 85% of the bonds. Pledged nontax revenues by the City of Akron will secure the remaining portion of the bonds. The bonds are also secured by a parity first security interest in the financed equipment, with other project debt totaling $5 million. Furthermore, the primary and program reserves mentioned above secure the bonds. 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. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion