News
Wall Street had a relatively calm week by recent standards, as markets hovered at all-time highs. Below, we outline the upgrades and downgrades across the municipal bonds market from this past week:
Upgrades
- Oregon Health and Science University: Moody’s Investors Service has upgraded the long-term rating to Aa1 and affirmed the VMIG 1 short-term rating of the letter of credit (LOC)-backed Oregon Health and Science University Variable Rate Revenue Bonds Series 2012B-3. Moody’s has evaluated the Bonds based on a joint default analysis (JDA) which reflects Moody’s approach to rating jointly supported transactions. JDA incorporates: (i) the long-term Counterparty Risk Assessment (CR Assessment) of the Bank, as provider of the LOC, and the credit quality of Oregon Health and Science University (Issuer); (ii) the probability of default in payment by both parties; and (iii) the structure and legal protections of the transaction, which provide for timely debt service payments.
- Allied Irish Banks, p.l.c.: Moody’s Investors Service has upgraded the long term ratings of the debts listed below to Baa3 from Ba3. The ratings are based on the structure and legal protections of each transaction which provide for the timely payment of principal and interest and on Moody’s long-term counterparty risk assessment of AIB, currently Baa3(cr).
- Sumter County, FL: Moody’s has upgraded the county’s issuer rating to Aa2 from Aa3. The upgrade of the issuer rating reflects the county’s sizable tax base that has continued to experience growth despite the recent recession and the county’s strong reserve position, which is bolstered by formal fiscal policies and conservative budgeting practices.
Downgrades
- Wisconsin Gas LLC: oody’s Investors Service downgraded today Wisconsin Energy Corporation’s (WEC) ratings, including: WEC’s Issuer and senior unsecured rating to A3 from A2, the junior subordinated rating to Baa1 from A3 as well as WEC’s short-term rating to Prime-2 from Prime-1. The rating action is triggered by Moody’s anticipation that WEC will soon be issuing senior unsecured notes to fund the cash consideration of its expected acquisition of Integrys.
- AFICA: Moody’s Investors Service has downgraded the Government Development Bank for Puerto Rico’s notes to Ca from Caa1, the Commonwealth of Puerto Rico’s general obligation and guaranteed bonds to Caa2 from Caa1, and other affiliated credits by two notches in most cases. According to recent disclosures, cash resources at the GDB may be fully depleted by the end of August in the absence of market access or emergency actions to preserve cash. GDB faces a 53% debt-service surge in the fiscal year starting July 1, and deposit withdrawals by the Puerto Rico Electric Power Authority (Caa3 negative) and the Puerto Rico Housing Administration in coming weeks will accelerate GDB’s liquidity erosion.
- Siena College: Moody’s Investors Service downgrades the rating on Siena College’s approximately $42 million of rated general obligation revenue bonds to Baa1 from A3. The downgrade to Baa1 reflects Siena’s persistent weak operating performance, driven by stagnant aggregate net tuition revenue, which makes up 82% of operations.
- Maricopa County S.D. 11 (Peoria Unified), AZ: At this time, Moody’s downgrades to A2 from Aa3 the rating on the district’s parity debt outstanding in the amount of approximately $153 million. The downgrade to the A2 rating primarily reflects the district’s sizeable and recently increased short-term borrowing for cash flow purposes that is well above levels observed in other Moody’s rated Arizona districts.
- WakeMed, NC: Moody’s Investors Service downgrades to A2 from A1 the ratings assigned to WakeMed’s bonds issued through the North Carolina Medical Care Commission. The downgrade of the rating to A2 reflects the weaker and variable financial performance at WakeMed as it implements a new strategy aimed at closer alignment with a large group of physicians that is intended to drive population health goals and market share gains.
- Guilderland Central School District, NY: Moody’s Investors Service has downgraded Guilderland Central School District’s general obligation rating to A1 from Aa3, affecting $37.7 million in debt. The downgrade to A1 reflects the district’s weakened financial position following several years of reserve draws and the expectation that reserves will decline further in fiscal 2015; a sizeable and stable tax base with above average income levels; manageable debt and moderate pension burden.
- Rockford Public Schools, MI: Moody’s Investors Service has downgraded to A3 from A2 the rating on Rockford Public Schools, MI’s general obligation unlimited tax (GOULT) debt. The A3 rating reflects the district’s very narrow reserve position and high degree of leverage from both its debt and pension burdens.
- Cardinal Local School District, OH: Moody’s Investors Service has downgraded to Baa2 from A2 the rating on the Cardinal Local School District, OH’s outstanding general obligation (GO) debt. The Baa2 rating reflects the district’s challenged financial position marked by very minimal cash reserves and limited voter support for new operating levies.
