Fitch Rts Cleveland-Cuyahoga Cnty Port Auth, 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 Cleveland-Cuyahoga County Port Authority, Ohio (the authority) $6,020,000 development revenue bonds, series 2005C (Columbia National Group, Inc. Project). The series 2005C 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 August 22. Fitch also affirms the 'BBB+' rating on the authority's $65.7 million outstanding bond fund development revenue bonds. The Rating Outlook is Stable. The 'BBB+' rating reflects the bond fund's sizable reserves and satisfactory underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. standards, and the economic strength of the Cleveland metropolitan area. While many of the fund's loans are to speculative grade borrowers, the program's 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. provide liquidity and first-loss protection to meet bond payments in the event a portion of the program's borrowers default on their loan repayments. The bond fund promotes economic development by loaning revenue bond proceeds to small- and medium-sized industrial, commercial, and nonprofit enterprises primarily in Cuyahoga County. By entering into cooperative agreements with governmental entities, the authority can also make loans for the bond fund in various counties throughout the state. All participants must meet the underwriting criteria of the authority and establish a reserve equal to at least 10% of the original par amount of the loan. Columbia National Group, Inc., which is the borrower, will meet this requirement with a standby letter of credit Standby Letter of Credit A stipulation that states a letter of credit will be called back if the payer defaults. Notes: A letter of credit is typically used in international transactions. (LOC LOC - lines of code ) from a qualified financial institution. In addition to the primary reserves provided by the borrowers totaling $7.9 million, the program maintains reserves totaling $13 million: a $4 million cash reserve established from program funds, and a $9 million irrevocable LOC from Fifth Third Bank. The LOC, which expires March 1, 2014 is subject to possible two-year extensions and 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 bond fund will have 19 loans outstanding totaling $72 million. The city of Garfield Heights Garfield Heights, city (1990 pop. 31,739), Cuyahoga co., NE Ohio, a residential and industrial suburb adjacent to Cleveland; founded 1904, inc. 1932. It has oil refineries and a steel industry. represents the program's largest borrower at $8.9 million (or 12% of total outstanding loans). The authority, which Fitch assigns an implied revenue bond rating of 'BBB', is the program's second-largest borrower at $7.6 million (or 11%). All of the program's bonds are equally and ratably secured by funds held in the common fund, providing resources for debt service payments should a portion of the outstanding loans default. Total primary and program reserves, including the program LOC, equal $21 million, or 29% of the principal of all outstanding loans. Bond proceeds will be loaned to Columbia National Group to finance the expansion of an existing manufacturing and industrial facility located in Cuyahoga Heights, Ohio. Columbia National Group is a holding company for several subsidiary steel processing and service companies in Ohio, Pennsylvania, and Michigan. Loan payments from the borrower will be the primary security for the bonds. The bonds are also secured by a parity first mortgage, with other project debt totaling $750,000, on the land, existing building and expansion. A first security interest in any equipment financed with bond proceeds also secures the bonds. Furthermore, the bonds are secured by the primary and program reserves mentioned above. 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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