Fitch assigns a rating of 'AAA/F1+' to the $89,000,000
County of Mecklenburg, North Carolina variable-rate general obligation
(GO) bonds, series 2006A. The bonds are scheduled to price via
negotiation with Wachovia Securities on Feb. 9. Fitch also affirms the
'AAA' long-term rating on the county's $1.7 billion in outstanding GO
bonds. The county has entered into a swap agreement to synthetically
fix the interest rate paid on approximately $42 million of the current
issuance.
The long-term 'AAA' GO bond rating recognizes the strength of Mecklenburg County's economic and tax base centered on the city of Charlotte, exceptional financial management highlighted by thorough long-term planning, and manageable debt levels despite rapid growth in population and capital needs. Providing for future operating and capital needs, particularly for schools, without straining the tax base will remain a challenge. This challenge has become more pronounced given the failure of a fall 2005 GO referendum for school capital, and Fitch is concerned that the county may not be able maintain taxpayer support for funding of the school capital program. Since the failure of the referendum for school capital projects, the county has organized a task force, chaired by a former North Carolina governor to determine the basis for the failure and to develop strategies that will enhance the opportunity for future success on such referenda. The results from the governor's task force will be integrated with the recommendations recently released by the Citizens Task Force on Charlotte-Mecklenburg Schools. Given the county's long trend of economic strength, broad financial resources, and demonstrated ability to prioritize and restrain expenditure growth, Fitch expects the county to be able to manage increasing demands. Therefore, Fitch maintains its Stable Rating Outlook on the county.
The short-term 'F1+' rating assigned to the series 2006B bonds is based on the support of a liquidity facility, in the form of a standby bond purchase agreement (SBPA), provided by DEPFA BANK plc, acting through its New York Branch. The SBPA provides for the payment of the purchase price of tendered bonds during the weekly interest rate mode and is sized to cover the principal amount and up to 35 days of interest at the maximum rate of 12% based on a 365-day year. The SBPA will expire on the earlier of Feb. 9, 2011 (the expiration date), unless such date is extended, or upon the occurrence of certain events of termination, all in accordance with its terms. The remarketing agent is Wachovia Bank, National Association.
The bonds initially bear interest in a weekly rate mode, but may be converted to a bond interest term or long-term rate mode. During the weekly rate mode, interest will be payable on the first business day of each month, commencing March 1, 2006. During the weekly rate mode, bondholders have the right to tender their bonds on any business day, following seven days' notice to the tender agent and the remarketing agent. The bonds will be subject to mandatory tender: on the day next succeeding the last day of each bond interest term; on conversion of the interest rate mode; upon expiration, cancellation, or termination of the SBPA and upon any substitution of the SBPA that results in a reduction or withdrawal of the current ratings on the bonds; and during the weekly rate, at the option of the issuer, on any interest payment date. Bonds are also subject to optional and mandatory redemption pursuant to the terms of the resolution.
The bond proceeds will be used to provide funds to pay the costs of acquiring, constructing and equipping various public school facilities, acquiring land for various public purposes, and constructing, renovating and equipping facilities at Central Piedmont Community College.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, '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.
The long-term 'AAA' GO bond rating recognizes the strength of Mecklenburg County's economic and tax base centered on the city of Charlotte, exceptional financial management highlighted by thorough long-term planning, and manageable debt levels despite rapid growth in population and capital needs. Providing for future operating and capital needs, particularly for schools, without straining the tax base will remain a challenge. This challenge has become more pronounced given the failure of a fall 2005 GO referendum for school capital, and Fitch is concerned that the county may not be able maintain taxpayer support for funding of the school capital program. Since the failure of the referendum for school capital projects, the county has organized a task force, chaired by a former North Carolina governor to determine the basis for the failure and to develop strategies that will enhance the opportunity for future success on such referenda. The results from the governor's task force will be integrated with the recommendations recently released by the Citizens Task Force on Charlotte-Mecklenburg Schools. Given the county's long trend of economic strength, broad financial resources, and demonstrated ability to prioritize and restrain expenditure growth, Fitch expects the county to be able to manage increasing demands. Therefore, Fitch maintains its Stable Rating Outlook on the county.
The short-term 'F1+' rating assigned to the series 2006B bonds is based on the support of a liquidity facility, in the form of a standby bond purchase agreement (SBPA), provided by DEPFA BANK plc, acting through its New York Branch. The SBPA provides for the payment of the purchase price of tendered bonds during the weekly interest rate mode and is sized to cover the principal amount and up to 35 days of interest at the maximum rate of 12% based on a 365-day year. The SBPA will expire on the earlier of Feb. 9, 2011 (the expiration date), unless such date is extended, or upon the occurrence of certain events of termination, all in accordance with its terms. The remarketing agent is Wachovia Bank, National Association.
The bonds initially bear interest in a weekly rate mode, but may be converted to a bond interest term or long-term rate mode. During the weekly rate mode, interest will be payable on the first business day of each month, commencing March 1, 2006. During the weekly rate mode, bondholders have the right to tender their bonds on any business day, following seven days' notice to the tender agent and the remarketing agent. The bonds will be subject to mandatory tender: on the day next succeeding the last day of each bond interest term; on conversion of the interest rate mode; upon expiration, cancellation, or termination of the SBPA and upon any substitution of the SBPA that results in a reduction or withdrawal of the current ratings on the bonds; and during the weekly rate, at the option of the issuer, on any interest payment date. Bonds are also subject to optional and mandatory redemption pursuant to the terms of the resolution.
The bond proceeds will be used to provide funds to pay the costs of acquiring, constructing and equipping various public school facilities, acquiring land for various public purposes, and constructing, renovating and equipping facilities at Central Piedmont Community College.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, '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.