MOODY'S DOWNGRADES CONNECTICUT RESOURCES RECOVERY AUTHORITY MUNICIPAL SERVICES FEE BOND; RATING FROM 'A' TO 'Baa1'
NEW YORK, March 25 /PRNewswire/ -- Effective yesterday, Moody's Investors Service downgraded the Connecticut Resources Recovery Authority's Municipal Service Fee Subordinated Lien Bond rating from "A" to "Baa1" based on a weakening of financial position due to a decision by the authority not to adjust rates sufficiently to mitigate recent recession and recycling driven declines in waste tonnage. There is a large and increasing liability, currently estimated at over $6 million, payable by the authority to the vendor, a Wheelabrator subsidiary. This liability, resulting from the rate structure and a failure to meet minimum tonnage requirements, is not reflected in the already narrow debt service coverage levels which are expected to be about 0.80 times debt service coverage in 1993 before the use of fund equity. The authority is pursuing additional waste commitments from nearby communities and is currently negotiating with Wheelabrator to reduce tonnage requirements due to recycling. The authority ultimately expects the liability to Wheelabrator to be forgiven, although until a final agreement is reached, this liability remains a credit concern. The assigned rating still recognizes the historically sound performance of the system's mass burn facility and the expectation that the minimum guaranteed tonnage commitments backed by a general obligation, unlimited tax pledge of participating communities, will be honored if called upon. Although Bridgeport currently rated "Ba," accounts for approximately 22 percent of tonnage commitments, about 70 percent of these commitments are from participants which have a rating of "A" or higher. The series A and B project bonds are not parity with the Subordinate lien bonds and are protected by substantial coverage margins. -0- 3/25/93 /CONTACT: Marie Pisecki, vice president and supervisor - Northeast Ratings, 212-553-7120; or William Hogan, senior analyst - Northeast Ratings, 212-553-4553, both of Moody's/
CO: Connecticut Resources Recovery Authority ST: Connecticut IN: SU: RTG
LR-SH -- NY065 -- 9727 03/25/93 15:50 EST
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|Date:||Mar 25, 1993|
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