S&P Rts Natl Rural Util Coop Fin Corp,D.C.'s Secs A+.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/16/97--Standard & Poor's today assigned its single-'A'-plus rating to National Rural Utility Cooperative A utility cooperative is a type of cooperative that is tasked with the delivery of a public utility such as electricity, water or telecommunications to its members. Profits are either reinvested for infrastructure or distributed to members in the form of "capital credits", which Finance Corp., D.C.'s (CFC CFC See: Controlled foreign corporation ) $75 million quarterly income capital securities due Sept. 15, 2046. Additionally, Standard & Poor's affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its single-'A'-plus rating on CFC's outstanding quarterly income capital securities (subordinated deferrable interest debentures). The rating assigned to CFC's quarterly income capital securities is based on their senior subordinated lien lien, claim or charge held by one party, on property owned by a second party, as security for payment of some debt, obligation, or duty owed by that second party. to CFC's member's subordinated certificates and equity. These securities have an interest deferral deferral - Waiting for quiet on the Ethernet. feature that allows CFC to defer interest payments for up to 20 consecutive quarters. Interest payments may only be suspended if CFC is not making payments on its member's subordinated certificates and equity. At the end of the deferral period, CFC must pay all accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. and unpaid interest on the securities. The rating on CFC's quarterly income capital securities is affirmed and reflects the following strengths: -- Adequate capitalization based on Standard & Poor's capital adequacy model for bond insurance companies; -- Liquidity risk profile that meets Standard & Poor's double-'A' standards for cooperative finance companies; -- Expected improvement in performance of the loan portfolio resulting from increased focus on distribution cooperatives, and restructuring of Deseret G&T and Soyland Power Cooperative loans; -- Experienced senior management and risk management staff that has thorough understanding of the rural electric cooperative industry; and -- Implicit support provided by its members. Offsetting these strengths are the following risks: -- Concentrated exposure to the electric cooperative industry which is going through significant changes due to increased competition; -- Single risk concentration, specifically large exposure to weaker credits such as Deseret; and -- A loan portfolio that includes some members who are in the double-'B' credit rating category. The rating was reviewed using a hybrid approach, under which a worst case depression capital model was used for the loan and guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. portfolio. Also, a more conventional debt to equity leverage ratio analysis was used for assessing funding risk Funding risk The risk associated with the impact on a project's cash flow from higher funding costs or lack of availability of funds. See: interest rate risk. . CFC passed Standard & Poor's capital adequacy depression test, after adjusting capital charges to reflect single industry concentration and exposure to weaker credits. CFC's current leverage ratio of 5.84 is conservative and is expected to increase to 8.00 within five years, which the current rating incorporates. OUTLOOK: STABLE The outlook is based on CFC's expected long-term sound asset quality, continued dilution of the top 10 borrower concentration, conservative leverage, and healthy liquidity, Standard & Poor's said. -- CreditWire CONTACT: Mark Glotfelty, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-1352 David Bodek, New York (1) 212-208-1813 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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