Fitch Rts FL Wtr Pollution Control Fin Corp $50MM Revs `AAA'.Business Editors NEW YORK--(BUSINESS WIRE)--June 4, 2001 Fitch has assigned an `AAA' rating to the Florida Water Pollution Control Financing Corporation's $50,000,000 water pollution control revenue bonds, series 2001. The bonds are scheduled to sell negotiated on June 12 through a syndicate led by Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. and UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System PaineWebber. Bond proceeds will fund loans to local governmental water and wastewater systems through the state of Florida's clean water state revolving fund revolving fund n. A fund established for a certain purpose, such as making loans, with the stipulation that repayments to the fund may be used anew for the same purpose. Noun 1. (CWSRF CWSRF Clean Water Act State Revolving Fund ) program. This issue represents the first use of leveraging within the state's CWSRF. The Florida State Legislature A state legislature may refer to a legislative branch or body of a political subdivision in a federal system. The following legislatures exist in the following political subdivisions: By the mid-1960s, when the U.S. (FDEP FDEP Florida Department of Environmental Protection FDEP Functional Dependency FDEP Flight Data Entry Panel FDEP Functional Dependency Gate FDEP Federal Department of Environmental Protection FDEP Flight Data Entry Position FDEP Flight Data Entry & Printout ), to issue additional bonds in the amount of $75 million and $100 million in 2002 and 2003, respectively. The `AAA' rating reflects the substantial coverage provided from a diverse mix of underlying borrower loan repayments. FDEP has pledged outstanding closed loans to the newly created leveraged program to yield subsidized sub·si·dize tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es 1. To assist or support with a subsidy. 2. To secure the assistance of by granting a subsidy. interest rates for bond funded loans and provide significant overcollateralization. Future leveraging and potential deterioration of credit quality as FDEP expands its CWSRF program to meet the substantial wastewater needs in Florida have been factored into Fitch's `AAA' rating. Florida's CWSRF program, established in 1989, has originated over $1 billion in direct loans to local governments for wastewater related projects utilizing federal grants and state matching funds Noun 1. matching funds - funds that will be supplied in an amount matching the funds available from other sources cash in hand, finances, funds, monetary resource, pecuniary resource - assets in the form of money . With the recently approved leveraging, FDEP has instituted a separate cash flow structure within its CWSRF, whereby outstanding closed loans funded by federal capitalization grants and matching money are pledged to bonds to substantially overcollateralize bond funded loans. FDEP maintains additional flexibility with direct loan repayments not pledged to bondholders. Most of these loans are active but have not been closed and could be assigned to the corporation in the future if needed. Loan repayments pledged to bondholders are derived from a diverse mix of local water and wastewater utility systems with good geographic distribution and strong weighted average credit quality. Loan obligations are typically subordinate to a local borrower's outstanding debt and extend for a maximum term of twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. . Private borrowers are not eligible for loans through the CWSRF. To date, no local borrower has defaulted on its loan obligation to the CWSRF. Overall credit quality of the pledged loan portfolio is strong and expected to remain fairly stable given the local governmental wastewater infrastructure demands outlined in the state's intended use plan. More than 70% of projected loan repayments are estimated to be of investment grade quality. The two largest borrowers are Tampa and Miami-Dade County, representing a combined 30% of pledged loan repayments. Although future lending to these borrowers is expected, strong underlying credit quality of the water and wastewater systems of Tampa (rated `AA' by Fitch) and Miami- Dade County Dade County can refer to the following places:
Based on estimated minimum annual debt service coverage of more than 8 times (x) and a reserve fund equal to approximately one-year of debt service, an estimated 88% of borrower repayments could default during the next four years without causing a debt service payment default. This level of default tolerance exceeds Fitch's `AAA' requirements given the credit composition of the pool by 259%. Fitch's stress tests assume all non-rated borrowers are of below investment grade quality, although actual default experience of water and sewer revenue-supported debt has been extremely rare. Future bond issuance is expected to reduce debt service coverage over the next several years, although even under conservative scenarios, the pool would likely pass Fitch's `AAA' requirements even at the legal minimum 1.15x coverage required for additional bond issuance. |
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