Fitch Ratings assigns a rating of 'A/F1' to the $78,605,000 City of Irvine, California Reassessment District No. 04-20 limited obligation improvement bonds, adjustable rate series A. The rating is based on the support provided by an irrevocable direct- pay letter of credit (LOC) issued by KBC Bank N.V., New York Branch (KBC rated 'A/F1', Stable Outlook). The Rating Outlook is Stable.
The bank is obligated to make payments of principal and interest when due, as well as purchase price for tendered bonds while the bonds are in the daily, weekly rate and monthly rate modes. The rating on the bonds will expire upon the earliest of: Dec. 31, 2014, the stated expiration date of the LOC, unless such date is extended; any prior termination of the LOC; and defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 55 days' interest at a maximum rate of 12% based on a 365-day year. The remarketing agent for the bonds is Bank of America Merrill Lynch. The bonds are expected to be delivered on or about Dec. 1, 2011.
The bonds initially bear interest at a daily rate, but may be converted to a weekly, monthly, semi-annual, extended rate, VIP and fixed interest rate mode. While bonds bear interest in the daily, weekly or monthly rate modes, interest payments are on the fifth business day of each month, commencing Jan. 6, 2012. The Bank of New York Mellon Trust Company, N.A., as trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held uninvested and are free from any lien prior to that of the bondholders.
Holders may tender their bonds on any business day with the requisite prior notice of the purchase. The bonds are subject to mandatory tender upon the expiration, termination, or substitution of the LOC; upon conversion of the interest rate mode; or upon the Trustee's receipt of notice from KBC that either (i) an event of default has occurred under the Reimbursement Agreement and directing the Trustee to give notice of mandatory purchase or (ii) upon notice that the interest portion of the LOC will not be reinstated. Mandatory and optional redemption provisions also apply to the bonds. There are no provisions for the issuance of additional bonds except under a supplemental indenture.
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:
--'U.S. Municipal Structured Finance Rating Criteria', April 25, 2011;
--'Rating Guidelines for Letter of Credit-Supported Bonds', July 26, 2011.
Applicable Criteria and Related Research:
U.S. Municipal Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=624129
Rating Guidelines for Letter of Credit-Supported Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647311
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.
Contacts:
Fitch Ratings
Primary Analyst
Linda Friedman, +1-212-908-0727
Senior
Director
Fitch, Inc.
One State Street Plaza
New York, NY
10004
or
Secondary Analyst
Richard Park, +1-212-908-0289
Associate
Director
or
Committee Chairperson
Joseph Staffa,
+1-212-908-0829
Senior Director
or
Media Relations:
Sandro
Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com