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Fitch Affirms Utah School Bond Default Avoidance Program at 'AAA'; Outlook StableNEW YORK --(Business Wire)-- Fitch Ratings has affirmed the 'AAA' rating on the Utah School Bond Default Avoidance Program. In conjunction with this rating action, the long-term enhanced ratings of the bonds listed at the end of this release, which qualify for the enhanced program rating, are affirmed. The Rating Outlook is Stable. RATING RATIONALE: --The state's guaranty pledge on qualifying school debt is a full faith and credit obligation, on par with that of its own general obligation (GO) bonds. As a result, bonds qualifying for the program receive an 'AAA' rating, equivalent to the state's GO bonds. --Program mechanics allow sufficient time for state funds to be made available to pay to pay debt service by the debt service payment date. --If insufficient funds are on hand, the state may issue GO bonds to meet its obligations under the guaranty. KEY RATING DRIVERS: --Changes in the credit quality of the state. SECURITY: State guaranty - full faith and credit obligation of the state of Utah, on par with the state's GO bonds. CREDIT SUMMARY: Fitch will assign an 'AAA' rating to Utah school district GO bonds qualifying for participation in the School Bond Default Avoidance Program. The rating is based on the state's full faith and credit guarantee provided as credit enhancement on qualifying school district GO bonds. The state will use cash on hand or issue short-term GO notes to meet a defaulting district's debt service obligation. Following a payment by the state, the state treasurer is required to immediately intercept any operating moneys distributed to the district by the state to reimburse the state until all obligations of the school district are paid in full. The state pledges that it will not alter, impair, or limit the rights vested by the program to the bonds until the bonds are fully paid and discharged, unless provision is made by law for protection of bondholders. Program mechanics allow sufficient time for state funds to be made available to pay to pay debt service by the debt service payment date. Moneys for debt service are to be remitted by a school district's business administrator to the paying agent at least 15 days prior to the debt service payment date. Should a district be unable to meet its payment obligation at that time, the business administrator must immediately notify the paying agent and state treasurer by telephone and in writing by either fax or U.S. mail. If sufficient moneys have not been received at least 10 days prior to the payment date, the paying agent must immediately notify the state treasurer by telephone and in writing by either fax or U.S. mail. The state treasurer will then transfer to the paying agent, on or before the payment date, sufficient moneys to make the debt service payment. As of fiscal year (FY) 2009, the state had guaranteed 203 bond issues for 36 of the state's 41 school districts, for an aggregate principal outstanding of $2.8 billion. Since the program's inception in 1997, the state has never been called upon to pay debt service on any bonds guaranteed under the Act. In conjunction with this rating action, the following long-term enhanced ratings, which qualify for the enhanced program rating, are affirmed at 'AAA'. Davis County School District (UT) --GO sch bldg bonds ser 2001 (gtd: Utah School Bond Default Avoidance Program). Granite School District (UT) --GO sch bldg bonds ser 2010 (gtd: Utah School Bond Default Avoidance Program) (gtd: Uta School Bond Default Avoidance Program). Jordan School District (UT) GO bonds --Ser 2001 (gtd: Utah School Bond Default Avoidance Program); --Ser 2002 (gtd: Utah School Bond Default Avoidance Program); --Ser 2003 (gtd: Utah School Bond Default Avoidance Program); --Ser 2004 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 1997 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 1998 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 1999 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2000 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2003A (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2004A (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2005 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2006 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2007 (gtd: Utah School Bond Default Avoidance Program). Murray City School District (UT) --GO bonds ser 2000 (gtd: Utah School Bond Default Avoidance Program); --GO bonds ser 2001 (gtd: Utah School Bond Default Avoidance Program); --GO rfdg bonds ser 2001A (gtd: Utah School Bond Default Avoidance Program); --GO rfdg bonds ser 2002 (gtd: Utah School Bond Default Avoidance Program) Park City School District (UT); --(Utah School Bond Guaranty Prog) GO rfdg bonds ser 2002 (gtd: Utah School Bond Default Avoidance Program); --(Utah School Bond Guaranty Prog) GO sch bldg & rdfg bonds ser 2001 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2000 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2004 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2005 (gtd: Utah School Bond Default Avoidance Program). Washington County School District (UT) --(Utah School Bonds Guaranty Program) GO Sch Bldg and Rfdg Bonds ser 2010A (Bank Qualified) (gtd: Utah School Bond Default Avoidance Program); --GO bonds ser 2000 (gtd: Utah School Bond Default Avoidance Program); --GO bonds ser 2004 (gtd: Utah School Bond Default Avoidance Program); --GO rfdg bonds ser 2001 (gtd: Utah School Bond Default Avoidance Program); --GO rfdg bonds ser 2004 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 1999 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2001A (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2002 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2003A (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2005 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2005A (gtd: Utah School Bond Default Avoidance Program); --sch bldg bonds ser 2006 (gtd: Utah School Bond Default Avoidance Program); --sch bldg bonds ser 2007 (gtd: Utah School Bond Default Avoidance Program); --GO sch bldg bonds ser 2009 (gtd: Utah School Bond Default Avoidance Program, Utah, State of); --GO sch bldg bonds ser 2010B (Fed Taxable-Direct Pay- BABs) (gtd: Utah School Bond Default Avoidance Program). Additional information is available at www.fitchratings.com Related Research: --'Tax-Supported Rating Criteria', dated Aug. 16, 2010. --'State Credit Enhancement Program Criteria', Dec. 16, 2009. --'U.S. State Government Tax-Supported Rating Criteria', dated Dec. 28, 2009. For information on Build America Bonds, visit www.fitchratings.com/BABs. Related Research: Tax-Supported Rating Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605 State Credit Enhancement Program Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=491794 U.S. State Government Tax-Supported Rating Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493048 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. |
