Fitch rates the City of Winston-Salem, North Carolina's
certificates of participation (COPs) as follows:
-- Series 2006A approximately $19.9 million 'AA+';
-- Series 2006B approximately $11.5 million 'AA'.
The 2006A and B COPs are scheduled for sale by negotiation with A.G. Edwards and BB&T Capital Markets on June 8, 2006. Fitch also affirms the 'AAA' rating on the city's $92.3 million outstanding general obligation (GO) bonds. The Rating Outlook is Stable.
Proceeds of the 2006A COPs will be used to fund construction of general government capital projects including the construction of several public safety facilities. In addition, about $4.0 million of the 2006A proceeds will by used to renovate and expand Winston-Salem State University (WSSU) Bowman Gray Stadium Field House. The city expects that debt service on this portion of the 2006A COPs ($2.5 million) will be reimbursed through lease payments from WSSU. Proceeds of the 2006B COPs will be used to refund the city's outstanding 2001C COPs; the sale is subject to market conditions that will yield close to 3% net present value savings.
The 'AA+' and 'AA' ratings on the 2006A and 2006B COPs respectively are based on the city's strong general credit characteristics and sound legal provisions associated with the lease transactions. The city has entered into several installment purchase agreements with the North Carolina Municipal Leasing Corporation (NCMLC) to finance construction of various capital projects. The 2006A COPs will be on parity with COPs issued under the 2001 installment purchase agreement, while the 2006B COPs will be on parity with COPs issued under the 1996 installment purchase agreement. The COPs are secured by annual lease payments made by the city to the NCMLC; these payments are subject to appropriation. Both the 1996 and 2001 agreements are further secured by separate deeds of trust on certain properties for the benefit of the NCMLC; the agreements are not cross-collateralized. The NCMLC has assigned all of its right, title and interest in the installment contracts and deeds of trust to the trustee for the benefit of the 2006A and 2006B COP holders. The 'AA' rating on the 2006B COPs reflects that the projects included in the 1996 deed of trust are not part of a core governmental function, somewhat increasing appropriation risk.
Winston-Salem's 'AAA' GO rating is based on its excellent financial operations and management, significant available financial resources, strong and diversifying economic base, and low-to-moderate debt levels with above-average amortization. Winston-Salem is the seat of Forsyth County in northwestern North Carolina and is a major economic and commercial center in the state. The city appears to be recovering from the economic recession at the beginning of the decade, with residential employment figures improving in each of the last two years and unemployment decreasing to below state and national averages. The city has experienced declines in textile and manufacturing employment which have largely been offset by increases in other manufacturing employment, as well as strong service industry job growth. Prospects for continued economic growth appear strong.
The city's financial position is strong, characterized by ample reserve and liquidity levels. At the close of fiscal 2005 a $6.1 million operating surplus increased the unreserved general fund balance (including amounts reserved for receivables) to 22.3% of spending and transfers out. The city expects general fund balances to benefit from surplus operations again in fiscal 2006 as a result of below budget spending and above budget property tax receipts. The city's overall debt level is moderate and should remain so given manageable capital needs and above average amortization.
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.
-- Series 2006A approximately $19.9 million 'AA+';
-- Series 2006B approximately $11.5 million 'AA'.
The 2006A and B COPs are scheduled for sale by negotiation with A.G. Edwards and BB&T Capital Markets on June 8, 2006. Fitch also affirms the 'AAA' rating on the city's $92.3 million outstanding general obligation (GO) bonds. The Rating Outlook is Stable.
Proceeds of the 2006A COPs will be used to fund construction of general government capital projects including the construction of several public safety facilities. In addition, about $4.0 million of the 2006A proceeds will by used to renovate and expand Winston-Salem State University (WSSU) Bowman Gray Stadium Field House. The city expects that debt service on this portion of the 2006A COPs ($2.5 million) will be reimbursed through lease payments from WSSU. Proceeds of the 2006B COPs will be used to refund the city's outstanding 2001C COPs; the sale is subject to market conditions that will yield close to 3% net present value savings.
The 'AA+' and 'AA' ratings on the 2006A and 2006B COPs respectively are based on the city's strong general credit characteristics and sound legal provisions associated with the lease transactions. The city has entered into several installment purchase agreements with the North Carolina Municipal Leasing Corporation (NCMLC) to finance construction of various capital projects. The 2006A COPs will be on parity with COPs issued under the 2001 installment purchase agreement, while the 2006B COPs will be on parity with COPs issued under the 1996 installment purchase agreement. The COPs are secured by annual lease payments made by the city to the NCMLC; these payments are subject to appropriation. Both the 1996 and 2001 agreements are further secured by separate deeds of trust on certain properties for the benefit of the NCMLC; the agreements are not cross-collateralized. The NCMLC has assigned all of its right, title and interest in the installment contracts and deeds of trust to the trustee for the benefit of the 2006A and 2006B COP holders. The 'AA' rating on the 2006B COPs reflects that the projects included in the 1996 deed of trust are not part of a core governmental function, somewhat increasing appropriation risk.
Winston-Salem's 'AAA' GO rating is based on its excellent financial operations and management, significant available financial resources, strong and diversifying economic base, and low-to-moderate debt levels with above-average amortization. Winston-Salem is the seat of Forsyth County in northwestern North Carolina and is a major economic and commercial center in the state. The city appears to be recovering from the economic recession at the beginning of the decade, with residential employment figures improving in each of the last two years and unemployment decreasing to below state and national averages. The city has experienced declines in textile and manufacturing employment which have largely been offset by increases in other manufacturing employment, as well as strong service industry job growth. Prospects for continued economic growth appear strong.
The city's financial position is strong, characterized by ample reserve and liquidity levels. At the close of fiscal 2005 a $6.1 million operating surplus increased the unreserved general fund balance (including amounts reserved for receivables) to 22.3% of spending and transfers out. The city expects general fund balances to benefit from surplus operations again in fiscal 2006 as a result of below budget spending and above budget property tax receipts. The city's overall debt level is moderate and should remain so given manageable capital needs and above average amortization.
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.