Fitch Assigns AAApre Rating to Foothill/Eastern Pre-Refunded Toll Rev Bonds

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Fitch Ratings has assigned an AAApre rating, with a negative watch to $2.3 billion Foothill/Eastern Transportation Corridor 1999 revenue series bonds that are being pre-refunded using the proceeds of a refinancing of the bonds conducted earlier this month.

The rating is currently exclusively tied to the U.S. sovereign creditworthiness and will reflect all changes to that rating, according to the Fitch report.

Fitch currently rates the U.S. government Triple A with a negative watch.

The rating on the pre-refunded bonds is based on the pledge of securities in the escrow deposit fund securing the bonds and reflects the lien of the refunded bondholders on the escrow trust funds, according to the report. It is further based on the amounts being invested in direct non-callable obligations of the United States or held uninvested in cash.

The bonds will be refunded on Jan. 2 with portions of the proceeds of the $2.3 billion F/ETCA refunding revenue bonds, Series 2013A and Series 2013B and Junior Lien Toll Road Refunding Revenue Bonds, Series 2013C, as well as amounts released from various accounts associated with the refunded Series 1999 bonds.

The escrow trust fund securities will primarily be invested in direct non-callable obligations of the United States, with a portion held uninvested in cash for payment of the principal and interest due on Jan. 15, 2014.

Pursuant to an irrevocable escrow agreement, the escrow bank, The Bank of New York Mellon Trust Company, N.A., holds a separate special irrevocable escrow account in trust for the benefit of the refunded bondholders.

All cash and securities held in the account are pledged irrevocably to the payment when due of interest on the refunded bonds and the payment of principal upon maturity and redemption. In the future, any investments of excess funds in the escrow account are limited to direct non-callable obligations of the United States; otherwise, excess funds will be held uninvested in cash.

The bonds that mature on January 15, 2014 will be paid on that maturity date. The bonds with maturity dates of Jan. 15, 2020; Jan. 15, 2023; Jan. 15, 2026 - Jan. 15, 2029 will be redeemed at a redemption price of 101% on Feb. 1, 2014. The remainder of the bonds with maturities up to Jan. 15, 2040 will be redeemed at par on Feb. 1, 2014.

BondResource Partners, LP verified the mathematical accuracy of computations relating to the adequacy of income from escrowed funds to pay debt service requirements of the refunded bonds, according to the Fitch report.

These computations were based on data provided to them by Barclays and Goldman, Sachs & Co., underwriters for the refunding bonds.

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Transportation industry California
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