Fitch Rates $74MM Virginia Public Bldg Auth Rev Rfdg Bonds 'AA+'

Fitch Rates $74MM Virginia Public Bldg Auth Rev Rfdg Bonds 'AA+' | Bild: © ad-hoc-news

--$73.795 million public facilities revenue refunding bonds series 2012 A.

The bonds are expected to sell via competition on Feb. 8, 2012.

In addition, Fitch affirms the 'AA+' rating on approximately $2.45 billion in outstanding VPBA public facilities revenue bonds.

The Rating Outlook is Stable.

SECURITY

The bonds represent a limited obligation of the authority, payable solely from General Assembly appropriations.

KEY RATING DRIVERS

--COMMONWEALTH APPROPRIATION OBLIGATION: Debt service for the current issuance derives from direct payments made by the Commonwealth of Virginia, subject only to legislative appropriation, resulting in a rating one notch below the commonwealth's general obligation (GO) bond rating.

--'AAA' COMMONWEALTH GO RATING: The commonwealth's GO bonds are rated 'AAA' by Fitch, reflecting Virginia's substantial economic resources, conservative approach to financial operations which include periodic revenue forecast updates, and lower-moderate debt burden.

--CENTRALIZED COMMONWEALTH OVERSIGHT: The commonwealth's oversight, payment, and budgeting processes for appropriation-backed debt are centralized and well established, with a single debt service appropriation made to Virginia's treasury board annually.

--PROJECTS ARE LEGISLATIVELY APPROVED: VPBA projects are legislatively approved, although no security interest exists in the projects.

CREDIT PROFILE

The 'AA+' rating is based on the pledge of appropriation by the commonwealth, whose GOs are rated 'AAA' by Fitch. Debt service for the bonds being offered derives from direct payments made by the commonwealth, subject only to legislative appropriation. The bonds are issued under the 1997 master indenture, which utilizes a single payment agreement providing for bond debt service. There is no security interest in the projects financed under the master indenture. Proceeds from the current offering will be used to refinance certain outstanding VPBA bonds for debt service savings.

Authorization, oversight and management of appropriation-backed debt is centralized and well established in the commonwealth. Additionally, by practice, the legislature makes a single debt service appropriation for the bulk of the commonwealth's debt obligations, including its GO bonds and authority debt service. The authority's financings involve central commonwealth agencies, including the authority and the treasury board, which approves all bond issues payable from commonwealth appropriations. Appropriation-backed debt is an important element of the commonwealth's debt structure.

The commonwealth's 'AAA' rating reflects its substantial economic resources, conservative approach to financial operations which includes periodic revenue forecast updates, and lower-moderate debt levels. For more information on the commonwealth's GO rating, please see the Fitch release titled 'Fitch Affirms Virginia's $1.7B GOs at 'AAA'; Outlook Stable' dated Jan. 27, 2012 and available at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from the Underwriter and IHS Global Insight.

Applicable Criteria and Related Research:

--'Tax-Supported Rating Criteria', Aug. 15, 2011;

--'U.S. State Government Tax-Supported Rating Criteria', Aug. 15, 2011.

Applicable Criteria and Related Research:

Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648898

U.S. State Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648897

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