Fitch Ratings downgrades the rating on the following $18.1 million special obligation and refunding taxable bonds, series 2010, of the Alabama Revolving Loan Fund Authority from AA-plus to AA-minus.
The rating outlook is stable.
The bonds are a special obligation of the authority, payable from an irrevocable pledge of a portion of the receipts of the privilege and license tax on providers of cellular radio telecommunication services.
The downgrade reflects a significant reduction in pledged revenues related to shifts in mobile device usage. Revenues have declined 35% since peaking in fiscal 2009 and, while debt service coverage remains high, performance of the pledged revenue stream is significantly weaker than anticipated and subject to further deterioration.
Pledged revenues continue to provide high coverage of debt service requirements on both an annual and maximum annual debt service (MADS) basis, reflecting the limited leveraging of the revenue stream.
The bonds have a first claim on pledged revenues and no additional parity borrowing is permitted under the authorizing legislation.
The rating is sensitive to significant on-going declines in revenues that reduce debt service coverage to levels inconsistent with the rating.
