Moody’s Investors Service downgraded to A2 from Aa3 its rating on Indianapolis’ gas utility system subordinate and second-lien revenue bonds, while at the same time removing from its watch list for a possible downgrade the utility’s senior-lien gas revenue refunding bonds. The downgrade reflects the Citizens Gas and Coke Utility’s failure during 2005 and 2006 to provide one-times debt service coverage on $170.9 million of outstanding subordinate and second-lien bonds issued in 2001 and 2003. Debt service coverage on the distribution system bonds was 0.84 times in 2005 and 0.79 times in 2005, with a preliminary coverage of 1.57 times in 2007. However, the strength of future debt service coverage ratios depends in part on rate approval that must be given by the Indiana Utility Regulatory Commission. Financial pressures in 2005 and 2006 stemmed partly from the 22-month period that passed before the commission approved a 3.6% rate increase late last year. Along with other factors, a policy to establish new rates every three years should stabilize debt service coverage and cash flow, analyst Dan Aschenbach wrote in a recent report. Moody’s removed from its watch list roughly $166.6 million of outstanding senior-lien revenue bonds, reflecting in part the utility’s service area, including Aa1-rated Indianapolis and Marion County, new rate policies, and limited borrowing plans. There is a debt service reserve for the senior-lien bonds funded at the average annual debt service, and no reserve for the subordinate-lien bonds. The utility carries a total of $336 million of outstanding debt rated by Moody’s.
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Democratic Gov. Laura Kelly nixed another tax cut bill passed by the Republican-led legislature this year, while pushing a less-costly plan.
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It's a big week for the Fortress-backed train company, which refinanced more than $4 billion of debt and broke ground on its West Coast high-speed line.
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Photos from The Bond Buyer's Texas Public Finance conference.
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The Mayo Clinic is undertaking a $5 billion expansion that may bring new debt as it reconstructs its core Rochester, Minnesota campus.
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"Just like the ATM became an additional transaction channel in the banking industry, I believe distributed ledger technology will provide municipal issuers with a similarly valued tool to sell their bonds," said Rick Coscia, Quincy's Strategic Asset Manager.
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