Fitch Rates Houston, Texas' CUS Bank Notes 'A+'
Source: Business Wire
--$100 million series B-4;
--$100 million series B-6.
The Rating Outlook is Stable.
RATING RATIONALE:
--Fitch has reviewed the interest rates, cure periods and amortization schedules specified in the documents governing the bank notes. Under the terms of the reimbursement agreements, the system is required to amortize bank note amounts over a period of approximately three to four years. At present, there are no bank notes outstanding.
--While the terms of potential bank notes could pressure the system's financial performance if the entire commercial paper authorization were to become bank notes for a sustained time period, Fitch believes that the system's existing financial profile and its implied market access to take out such notes with long-term debt serve to offset some concern. Furthermore, Fitch believes the risks associated with the notes are adequately reflected at the current rating level.
SECURITY:
The bank notes are payable solely from and secured by a third lien on net revenues of the system after payment of the system's prior lien and first lien bonds and any proceeds of obligations issued to refund any advances made under the reimbursement agreements.
For more information on the combined utility system, see Fitch's press release titled 'Fitch Affirms Houston Texas' Combined Utility System First Lien Revs at 'A+' dated March 26, 2010. The rating on these bonds was revised to 'AA-' on April 30, 2010.
For information about Fitch's recalibration of this rating see Fitch's press releases 'Fitch to Recalibrate U.S. Municipal Bond Ratings Today' or 'Fitch Releases Recalibration Summary Information on U.S. Water and Sewer Ratings', both dated April 30, 2010. Each of these press releases is available on Fitch's web site at 'www.fitchratings.com'
Applicable criteria available on Fitch's website at 'www.fitchratings.com':
--'Revenue-Supported Rating Criteria' dated Dec. 29, 2009;
--'Water and Sewer Revenue Bond Rating Guidelines' dated Aug. 6, 2008.
Additional information is available at www.fitchratings.com.
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Contact:
Fitch Ratings, Austin
Gabriela Gutierrez, 512-215-3731
Doug Scott, 512-215-3725
or
Media Relations:
Cindy Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com
