Fitch Upgrades S-T Rating to 'F1+'on CO Springs VRD Utilities Sys Revs, Series 2006B
The short-term rating action is in connection with: (i) the substitution of the liquidity support provided by Bayerische Landesbank (rated 'A-/F1'/Stable Outlook), acting through its New York branch, in the form of a Standby Bond Purchase Agreement (SBPA), with a substitute SBPA issued by Landesbank Hessen-Thuringen Girozentrale (Helaba; 'A+/F1+'/Stable Outlook), acting through its New York branch; and (ii) the mandatory tender of the bonds.
KEY RATING DRIVERS:
The short-term 'F1+' rating is based on the liquidity support provided by Helaba, in the form of a substitute SBPA, which has a stated expiration date of Sept. 13, 2021, unless extended or earlier terminated, during the weekly interest rate mode only. Colorado Springs Utility System's 'AA' long-term rating reflects the diverse combined utility revenue base, with continued solid financial performance and competitive retail rates, despite a considerable capital spending program. The Rating Outlook is Stable. For more information on the long-term rating, see the press release dated Aug. 28, 2015, available on Fitch's website at 'www. fitchratings. com'.
The substitute SBPA provides for the payment of the principal component of purchase price plus an amount equal to 35 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the weekly rate mode in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The substitute SBPA will expire on Sept. 13, 2021, the stated expiration date, unless such date is extended; upon conversion to any mode other weekly; or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of the bonds which result in an automatic and immediate termination. The Remarketing Agent for the bonds is JPMorgan Securities, Inc.
The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support, and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bonds. The long-term rating is exclusively tied to the creditworthiness of the bonds and will reflect all changes to that rating.