Fitch Rates Greensboro, NC’s COPS ‘AA’; Outlook Stable
Business Wire, August 30, 2010
NEW YORK — Fitch Ratings has assigned the following rating:
–$7 million in certificates of participation (COPs), series 2010 ‘AA’.
The bonds are scheduled to sell via negotiation the week of Sept. 13,
2010.
In addition, Fitch affirms the following ratings:
–$161.2 million general obligation (GO) bonds at ‘AAA’;
–$10.8 million in special obligation bonds at ‘AAA’.
The Rating Outlook is Stable.
RATING RATIONALE:
–The ‘AA’ rating on the COPS reflects debt service being subject to
appropriation and the non-essential nature of the mortgaged property as
well as the general credit characteristics of the city.
–Conservative budgeting and cost saving measures have minimized the
impact of the economic downturn and depressed revenue environment on
Greensboro’s financial profile to date.
–Reserves and liquidity remain healthy and serve to temper risk against
budgetary pressures that are likely to persist over the next several
years.
–Prospects for economic development and diversification remain sound
buoyed by Greensboro’s university presence, highly educated workforce,
and transportation infrastructure anchored by the Piedmont Triad
International Airport.
–A declining yet still sizable manufacturing sector has served to limit
income metrics and contributed to a high rate of unemployment presently
on par with the national average.
–Overall debt levels should remain moderate given the rapid
amortization of outstanding principal, manageable additional issuance
plans, and the city’s continued adherence to conservative debt policies.
–For the special obligation bonds, the rating incorporates the general
creditworthiness of the city in addition to very strong coverage from
pledged revenues, lack of additional issuance plans, and strong legal
provisions.
KEY RATING DRIVERS:
–Fitch expects continued strong financial management will result in
balanced operations that preserve existing reserve levels and financial
flexibility in the near term.
–For the special obligation bonds, material coverage dilution resulting
from the issuance of additional debt is not anticipated and could carry
negative rating implications.
SECURITY:
The COPs are being executed and delivered pursuant to a Trust Agreement,
dated Sept. 1, 2010, between the Greensboro Center City Corporation (the
corporation) and U.S. Bank National Association, the trustee. The
proceeds of the COPS will be advanced to the city pursuant to an
Installment Financing Agreement (the agreement), also dated Sept. 1,
2010, between the city and the corporation. The COPS evidence
proportionate and undivided ownership interests in the installment
payments, which are equal to debt service, to be made by the city
pursuant to the agreement. The city’s obligation under the agreement
will be secured by a Deed of Trust, dated as of the delivery date, from
the city to the trustee for the benefit of the corporation, granting a
first lien on the mortgaged property, which consists of an aquatics
center. In the event of non-payment, the trustee is able to foreclose on
the mortgaged property. Pursuant to the Trust Agreement, the corporation
will assign to the trustee all of its rights under the agreement,
including the right to receive installment payments, and the deed of
trust, for the benefit of bondholders.
The GO bonds are secured by the city’s full faith and credit and
unlimited taxing authority.
The special obligation bonds are secured by the city’s portion of the
proceeds of two 0.5% sales and use taxes (Articles 40 and 42) levied by
Guilford County (the county).
CREDIT SUMMARY:
Greensboro is the county seat of Guilford County (GO bonds rated ‘AAA’
with a Stable Outlook) and the third largest city in the state with a
2009 population of 250,642
debt negotiation