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MOODY'S ASSIGNS CONDITIONAL (A 1) RATING TO INDIANAPOLIS BONDS FOR UNITED AIRLINES MAINTENANCE FACILITY

MOODY'S ASSIGNS CONDITIONAL (A 1) RATING TO INDIANAPOLIS BONDS FOR
 UNITED AIRLINES MAINTENANCE FACILITY
 NEW YORK, Dec. 12 /PRNewswire/ -- Moody's Investors Service today assigned a Conditional (A 1) rating to $140,000,000 Indianapolis Local Public Improvement Bond Bank Bonds, Series 1991 C. Proceeds will provide for the city's share of costs to build an approximately $1 billion maintenance facility for United Airlines. Together, the city, state, and possibly neighboring Hendricks County will contribute $293.7 million toward the project. In turn, United has obligated itself for the creation of at least 6,300 jobs at an average compensation of $45,000 each. The bonds are ultimately secured by the pledge of the City County Council, acting through its redevelopment commission, to make lease rental payments from their joint distributive share of county option income tax receipts. This obligation is effective once certain construction requirements are met and regardless of United's occupance of the facility.
 The rating reflects the economic and legal strengths of this pledge, as well as risks specific to the success of the project. With respect to the pledged revenues, income taxes are an established operating revenue source generated from an economically sound base. Debt service coverage by historical revenue levels is substantial, with legal safeguards respecting additional debt and continuance of the income tax intending to maintain that margin of coverage. Project risks, however, are reflected to some extent in both the conditional nature and the specific level of the long term rating. The conditional aspect of the rating pertains to the need to satisfy the legal requirements of project construction before the lease payments supporting the bonds may commence. This is typical of the vast bulk of Indiana lease financings. Project risks embodied in the long term rating have to do with the obligation of Indianapolis to pay for what is basically a private, nonessential facility, and the near term exposure related to United's willingness and ability to complete project construction in a timely manner. That exposure stems from United's role in financing and constructing the facility while operating in a competitive and volatile aviation industry.
 -0- 12/12/91
 /CONTACT: Paul Devine of Moody's, 212-553-0012/ CO: Moody's Investors Service ST: Indiana IN: SU: RTG


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Publication:PR Newswire
Date:Dec 12, 1991
Words:379
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