MOODY'S RAISES RATING ON CITY OF PHILADELPHIA AIRPORT REVENUE BONDS TO 'Baa' FROM 'Ba'
MOODY'S RAISES RATING ON CITY OF PHILADELPHIA AIRPORT REVENUE BONDS TO 'Baa' FROM 'Ba' NEW YORK, July 8 /PRNewswire/ -- Effective yesterday, Moody's Investors Services has revised the rating on the City of Philadelphia's Airport Revenue Bonds to "Baa" from "Ba." The rating revision applies to the airport's $293 million outstanding Airport Revenue Bonds. In November 1990 the rating on the city's Airport Revenue Bonds was revised to "Ba" from "Baa" reflecting weakened revenue bondholder security due the enterprise's participation in the city's consolidated cash account and its resulting exposure to the city's financial crisis. After airline protests over the use of Airport Capital Funds for city operating purposes and the resulting threat of legal action, the city entered into an agreement with the airlines, whereby, the city agreed, among other things, to repay funds borrowed from the aviation capital funds, to separate aviation funds from the consolidated cash account, to use aviation monies only for airport related purposes and to prohibit any temporary advances from the aviation funds to other general funds of the city. The city continues to be in compliance with its agreement with the airlines. The aviation funds have been fully reimbursed and are now separate from the consolidated cash account. Since the separation there has been no indication that aviation funds have been used for anything other than airport purposes. It is important to note that the segregation of aviation funds is voluntary and no legal action has been taken to ensure the permanent separation of funds. The continuation of this administrative policy on the part of the city is critical to the maintenance of credit quality. The physical separation of the two aviation funds from consolidated cash limits the enterprise's exposure to the city's continuing financial crisis and restores basic revenue bondholder security. Overall operating characteristics of the airport are satisfactory. However, the city's ongoing role in key airport activities such as labor negotiations and approval of budgets, bond issuances, contracts and purchase requisitions raises concerns about the level of administrative autonomy of the airport and results in the medium grade rating. -0- 7/8/92 /CONTACT: Nancy Barbe, 212-553-7123, or Robert J. Miller, 212-553-4947, both of Moody's/ CO: City of Philadelphia ST: Pennsylvania IN: SU: RTG
SH-TS -- NY012 -- 7313 07/08/92 09:43 EDT
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|Date:||Jul 8, 1992|
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