News Column

Fitch Affirms Indiana Finance Authority Self-Liquidity-Backed Bonds at 'F1+'

July 30, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms the 'F1+' rating assigned to the Indiana Finance Authority's (IFA) $36.65 million lease appropriation bonds (Stadium Project), series 2008A.

SECURITY

Commitment of the authority to purchase bonds bearing interest at a daily or weekly rate that is tendered for purchase for which remarketing proceeds are insufficient.

KEY RATING DRIVERS

AMPLE LIQUIDITY: Funds designated by the IFA for self-liquidity, the spending of which is entirely at the discretion of the IFA, provide ample liquidity to meet tenders on internally-supported variable-rate debt that has not been remarketed. The IFA's stated intent is to maintain balances in the funds at about 2x the amount of its commitment, and current coverage is higher.

ADEQUATE TIMING MECHANISMS: Timing mechanisms detailed in supplemental indentures and an internal procedures letter allow for timely payment in the event of a failed remarketing.

RATING SENSITIVITIES

SIGNIFICANT EROSION OF COVERAGE: A significant erosion of coverage through declines in available resources could pressure the rating. Given the very solid historical coverage, Fitch considers this unlikely.

CREDIT PROFILE

The IFA provides self-liquidity for a portion of the variable-rate debt associated with its stadium financing. As of June 30, 2014, the IFA's available liquid resources within its State Revolving Fund Wastewater Equity Grant account of $116.8 million (as discounted per Fitch's rating criteria) covered potential short-term obligations of $36.65 million (series 2008A bonds) by a strong 3.19x. Account assets are made up entirely of money market funds. Earlier this year, the IFA shifted liquidity support of its series 2008A-2 bonds to a standby purchase agreement (SBPA) support from internal liquidity support. Under the SBPA provided by BMO Bank Harris N.A., Fitch assigned a 'F1+' rating to the bonds. The authority began the self-liquidity program in 2009 in an effort to diversify its liquidity providers. No further use of internal liquidity is contemplated.

The supplemental indenture for the stadium project provides for the payment of the purchase price by the authority of tendered 2008A stadium bonds during the daily and weekly rate modes in the event the proceeds of a remarketing of the bonds following a tender are insufficient. The commitment is sized to provide for the entire principal amount of the bonds plus interest coverage of 37 days calculated at a maximum interest rate of 12%. The short-term 'F1+' rating will expire on Feb. 1, 2035 for the series 2008A stadium bonds and the term of the commitment matches the scheduled maturity date of the bonds. The bonds currently bear interest at a weekly rate.

The IFA was created in 2005, consolidating the debt-issuing entities of the state. The stadium and related convention center bonds funded a large project that included construction of a new stadium in downtown Indianapolis where the Indianapolis Colts National Football League franchise plays and an associated convention center expansion. Ultimately, the security for the bonds (and the 'AA+' long-term rating) rests with biennial state lease appropriations of rental payments that commenced upon project completion. Earmarked local tax revenues have been sufficient to pay debt service and the state anticipates general fund revenues will not be necessary.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'U.S. State Government Tax-Supported Rating Criteria' (Aug. 14, 2012);

--'Rating U.S. Public Finance Short-Term Debt' (Dec. 9, 2013).

Applicable Criteria and Related Research:

U.S. State Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686033

Rating U.S. Public Finance Short-Term Debt

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724680

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=842654

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. 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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Eric Kim, +1 212-908-0241

Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Secondary Analyst

Laura Porter, +1 212-908-0575

Managing Director

or

Committee Chairperson

Karen Krop, +1 212-908-0661

Senior Director

or

Media Relations:

Elizabeth Fogerty, +1 212-908-0526

elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings


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