Fitch Ratings has assigned an 'AA+' rating to the following Virginia Port Authority bonds:
--$45.19 million commonwealth port fund revenue refunding bonds, series 2012B (taxable);
--$4.85 million commonwealth port fund revenue refunding bonds, series 2012C.
The bonds are expected to be offered via negotiation on Aug. 28, 2012.
In addition, Fitch has affirmed the 'AA+' rating on $224.9 million in outstanding commonwealth port fund revenue bonds. Further, Fitch affirms the 'AA+' rating on the outstanding commonwealth appropriation-backed bonds detailed at the end of this release.
The Rating Outlook is Stable.
The bonds are limited obligations of the authority, expected to be paid from the revenues appropriated and allocated monthly for such purpose by the General Assembly to the commonwealth port fund, which derive from an allocation of funds due to the commonwealth's transportation trust fund (TTF). In the event such revenues are insufficient, bonds would be paid from a sum sufficient appropriation from, first, legally available revenues in the TTF and, second, from the commonwealth's general fund.
KEY RATING DRIVERS
--COMMONWEALTH APPROPRIATION OBLIGATION: The rating, one notch below Fitch's Commonwealth of Virginia (the commonwealth) 'AAA' general obligation (GO) rating, is based on access to legally available funds in the commonwealth transportation trust fund and, ultimately, the commonwealth's general fund. Each issuance of port fund revenue bonds requires approval of the governor and the commonwealth's Treasury board.
--'AAA' COMMONWEALTH GO RATING: The commonwealth's GO bonds are rated 'AAA', reflecting Virginia's substantial economic resources, conservative approach to financial operations, and lower-moderate debt burden.
The rating, one notch below the commonwealth's GO rating, is based on access to legally available funds in the commonwealth's TTF and, ultimately, the commonwealth's general fund. However, port fund revenue bonds are expected to be paid from revenues of the commonwealth's port fund, consisting of 4.2% of the yield of 1986-enacted increases in the commonwealth's sales tax, motor vehicle sales and use tax, motor fuel tax, and motor vehicle registration fees that are credited to the TTF. The authority has covenanted that in the event the primary income derived from the port fund is insufficient for debt service it will include in its budget a request to the governor for an appropriation of a sum sufficient to provide for any deficiency, first from the TTF and then from the general fund.
The TTF receives a variety of revenues representing various highway-related taxes and a portion of the state sales and use tax. Total trust fund revenues totaled $1.06 billion in fiscal year (FY) 2012 and are projected to total $1.096 billion in FY 2013, representing growth of 3.4%. The allocation to the commonwealth port fund, inclusive of TTF interest allocated to the port fund and less certain allocated expenses, was $36.3 million for FY 2012. The port fund allocation for FY 2013 is projected to increase to $38.5 million, and the projected allocation provides 1.95x coverage of maximum annual debt service (MADS) on port fund revenue bonds following this issuance of refunding bonds.
The Virginia Port Authority, through the not-for-profit Virginia International Terminals, operates four port facilities in the Norfolk area, one intermodal facility approximately 60 miles west of Arlington, VA, and has recently been engaged to operate the Port of Richmond. The bonds being issued now will be secured under the 2002 resolution and will refinance the authority's outstanding series 2005A and 2005B bonds for debt service savings. The issuance of additional port fund bonds under the 2002 resolution requires satisfaction of an historical test of 1.10x coverage of MADS on all bonds from adjusted port fund income in the preceding fiscal year. (Adjusted income allows for recognition of any changes that may be made to the income sources.) Authority bonds issued under a prior 1988 resolution are no longer outstanding. While the authority has entered into a commitment to fund a portion of planned improvements to the U.S. Highway 460 corridor from a portion of the TTF's annual funding, this commitment is subordinate to that of 2002 resolution bondholders.
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 further information regarding the commonwealth's general credit see 'Fitch Rates Virginia's $99M Refunding GOs 'AAA' dated Feb. 13, 2012 available at 'www.fitchratings.com'.
As noted above, Fitch also has affirmed the 'AA+' rating and Stable Outlook on the following bonds, based on access to sum sufficient general fund appropriations of the commonwealth:
--Virginia Biotechnology Research Partnership Authority state appropriation bonds;
--Fairfax County Economic Development Authority state appropriation bonds;
--Norfolk Industrial Development Authority state appropriation bonds;
--Big Stone Gap Redevelopment & Housing Authority state appropriation bonds.
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.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 14, 2012);
--'U.S. State Government Tax-Supported Rating Criteria' (Aug. 14, 2012).
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria
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