Printer Friendly

Fitch Rates $44MM Rhode Island Econ Dev Corp Motor Fuel Tax Bonds 'A'.

NEW YORK -- Fitch Ratings assigns an 'A' rating to approximately $43.66 million Rhode Island Economic Development Corporation (RIEDC) Rhode Island motor fuel tax revenue bonds, series 2006A. The bonds are expected to sell the week of Jan. 30 through negotiation with a syndicate led by UBS Investment Bank. Fitch also affirms the 'A' rating on RIEDC's approximately $53 million outstanding motor fuel tax revenue bonds.

The 'A' rating reflects the good legal protections governing the program, including the legislatively dedicated two cents of the state's 30-cent motor fuel tax that secures the bonds and the statutory cap on total debt and debt service. The pledged revenues are subject to state appropriation and there are covenants to include such amounts in the governor's proposed state budget. Once appropriated, pledged revenues are remitted to the trustee according to the payment agreement executed by key officials in the administration. The motor fuel tax bonds provide the state's approximately 20% share of four priority transportation projects to be financed primarily with federal transportation funds. One series of state motor fuel tax revenue bonds was sold in 2003, and a final offering of about $15 million is expected in 2009 to coincide with project construction.

Pledged revenues are stable but slow growing. The additional bonds test of 1.25 times (x) maximum annual debt service (MADS) is lenient, and coverage from dedicated revenue is narrow, although retention of residual funds for program purposes provides some offset. Coverage of projected MADS after all three issues is 1.25x based on 2005 revenues. For the bonds now offered and planned issuance, projected coverage is around 1.3x to 1.6x. There are provisions for a debt service reserve fund equal to 50% of MADS, which can be eliminated if coverage of 2x MADS is maintained for three years, as well as an additional 50% held in a residual reserve. Upon release from either reserve, surplus funds may be used for debt service and pay-as-you-go project costs.

These bonds are separately secured from grant anticipation bonds that are providing the remaining 80% of the priority transportation project costs. The second series of such bonds, repayable from federal transportation funds, is being issued concurrently with this issuance. The projects being constructed are critical to the state transportation program and are part of the approved multi-year transportation improvement program for the Rhode Island Department of Transportation (RIDOT).

The state imposes a 30-cent per gallon motor fuel tax, yielding $142.7 million in fiscal 2005, equal to $4.76 million per penny. Since 1994, motor fuel taxes have been credited to the Intermodal Surface Transportation Fund (ISTF). Motor fuel taxes are legislatively allocated to RIDOT, the state general fund, the department of elderly affairs for elderly transportation, and for public transportation. Since 1999, RIDOT's share of the motor fuel tax has been 20.75 cents, including the 2 cents for this program.

RIDOT is responsible for the construction and maintenance of nearly all state roads, bridges and transportation facilities, and administers the state and federal highway construction assistance programs.

The bonds will be due June 15, 2007-2026 and are callable beginning June 15, 2016.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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 are also available from the 'Code of Conduct' section of this site.
COPYRIGHT 2006 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Date:Jan 23, 2006
Previous Article:T-Mobile Sues Cell Phone Record Brokers for Criminal Profiteering; Carrier Files Suit to Protect Customer Records; Calls for Prompt Action to Punish...
Next Article:A&E Consultants Launches in '06 with Stellar List of New Clients; Agency Led by Trailblazing Women Entrepreneurs.

Related Articles
Site selection who's who: the private and government agencies listed below will be eager to provide you with all the information and guidance you...
Fitch Rates State of Nevada's $189.9MM Highway Bonds 'AA'.
Fitch Rates Brevard County, Florida's $48MM Local Option Fuel Tax Rev Bonds 'A'.
Fitch Rates $187.5MM Rhode Island Econ Dev Corp Grant Antic Bonds 'AA-'.
Fitch Rates State of Nevada's $190.82MM Highway Bonds 'AA'.
Fitch Rates Polk County, Florida $38.4MM Constitutional Fuel Tax Rev Improvement & Rfdg Bonds 'AA-'.
Fitch Rates Louisiana's $1.1B Gasoline & Fuels Tax Revs 'A+'; Affirms Outstanding; Outlook Stable.
Correction: Fitch Rates Polk Cnty, FL $38.4MM Constitutional Fuel Tax Rev Improv & Rfdg Bonds 'AA-'.
Fitch Rates Brevard County, Florida's $49.5MM Fuel Tax Bonds 'A'; Affirms Outstanding.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters