Fitch Ratings assigns a rating of 'AA/F1+' to the $28,800,000 Pasadena Public Finance Authority, California Taxable Variable Rate Demand Lease Revenue Refunding Bonds (Paseo Colorado Parking Facilities) Series 2008. The 'AA' long-term rating is based on the City's credit quality. The bonds will mature on June 1, 2038.
Fitch also affirms the implied general obligation (GO) rating of 'AA+' and the 'AA' rating on the city's following obligations:
-- $123.2 million (taxable) pension obligation bonds, series 1999A and 1999B;
-- $160.8 million COPs, series 1993, 2001, 2006A, 2008B, and 2008C;
-- $134.7 million variable-rate demand refunding COPs, series 2008A.
The Rating Outlook is Stable.
The 'AA' rating for the series 2008 bonds reflects the general fund support and adequate lease features, including a covenant to budget and appropriate, standard rental interruption insurance, other insurance coverages, and a debt service reserve fund. The 'AA+' implied GO rating reflects the city's ongoing strong financial position, with good general fund balances and above-average reserve levels. The city's revenues are diverse, its debt levels are moderate, and its financial management policies are conservative, as evidenced by the recent decision to increase the general fund reserve minimum requirement in fiscal 2009. While wealth levels are above-average and assessed valuation growth has been solid, supported by a healthy local economy, the local residential property market is slowing. The city's job base is diverse and the unemployment rate is consistently below county and state levels. The city's pensions are well funded and there are no other post-employment employee benefit liabilities.
The short-term 'F1+' rating is based on the support of a standby bond purchase agreement (SBPA) provided by KBC Bank, N.V., acting through its New York Branch. The SBPA provides for the payment of the purchase price of tendered bonds during the weekly rate mode in the event the proceeds of a remarketing of the bonds following an optional or mandatory tender are insufficient to pay the purchase price. The SBPA is sized to provide for the entire principal amount of the bonds and 34 days of interest at the maximum interest rate of 12%. The SBPA will expire on September 16, 2011 or upon the occurrence of other events of termination, according to its terms. The remarketing agent for the bonds is Merrill Lynch & Co. The bonds are expected to be available for delivery on or about September 17, 2008.
Interest accruing on the bonds will be initially determined at the weekly rate, but may be converted to a fixed interest rate. Interest during the weekly rate mode will be paid on the first business day of the month, commencing October 1, 2008. Owners have the right to tender their bonds during the weekly rate modes with the requisite prior notice. Bonds are subject to mandatory tender: (1) upon the conversion of the interest rate mode; (2) upon expiration, termination or replacement of the SBPA, unless prior rating agency confirmation of the rating has been obtained. Fitch's short-term rating on the bonds will expire upon any expiration or termination of the SBPA.
The proceeds of the bonds will be used to refund the Authority's Taxable Variable Rate Demand Lease Revenue Bonds (Paseo Colorado Parking Facilities), Series 2000.
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.