LOS ANGELES — Nevada secured two triple-A ratings and a double A-plus rating ahead of plans to price $573 million in unemployment compensation fund special revenue bonds on Oct. 29.
Standard & Poor's and Moody's Investors Service gave the bonds AAA and Aaa ratings, respectively, in reports released on Oct. 18.
Fitch Ratings gave the bonds the slightly lower AA-plus rating in a report released the same day.
Goldman Sachs and RBC Capital Markets are lead managers on the bonds.
Proceeds will be used to repay $520 million in outstanding federal unemployment loans, make a deposit into the state's unemployment trust fund, prefund interest and pay the costs of issuance, according to the Moody's report.
Moody's analysts cited the bonds support by strong security features, primarily the pledge of a special assessment on a substantially all employers in Nevada, covering about 1 million employees and a taxable wage base of $23 billion.
The assessment will be levied at a rate that will result in 1.5 times debt service coverage. If revenues are insufficient, the state must levy an additional assessment to cover the shortfall.
Two additional features are a short five-year maturity reducing the probability of a severe reduction the unemployment base and a state non-impairment covenant. The state also has a 98% collection rate on its unemployment tax, Fitch analysts said in their report.
In making its rating, Fitch also cited a true-up provision that requires the administrator of the Employment Security Division of the Department of Employment to levy a supplemental special bond contribution if there are projected insufficiencies in the principal or interest accounts 75 days prior to a payment date.
The unemployment rate at 9.5% in August, remains well above the national average, but is much reduced from the peak of 14% it reached in 2010, according to the Fitch report.
