Moody's Investors Service said it has upgraded to Aa2 from Aa3 the rating on $675 million of New Hampshire Municipal Bond Bank's (NHMBB, bond bank) 1978 Resolution bonds.
Concurrently, Moody's has assigned a Aa2 rating to $24.7 million 2015 Series B Refunding Bonds. It also maintains a Aa1 rating on the bond bank's 1979 Resolution state guarantee bonds and a Aa3 rating on the bond bank's 2005 Resolution bonds. The outlook is stable.
The upgrade to Aa2 from Aa3 reflects the improvement in the underlying credit quality of the pool participants as well as structural changes to the program that extend loan repayment due dates to 30 days from 5 days prior to debt service.
The rating incorporates the application of Moody's methodology for pool program debt. The methodology's key rating factors and weights assigned to each factor are as follows; underlying credit quality and default tolerance (50%); pool size and diversity (15%); debt structure and legal covenants (20%); and management and governance (15%).
The methodology states that for pool program structures that include a moral obligation pledge of their respective states to replenish a draw on the debt service reserve fund (DSRF) in the event of a loan repayment deficiency, we will compare the credit quality of moral obligation pledge to the underlying pool program rating and apply the higher of the two.
In this case, the rating agency has determined the Aa2 credit quality of the New Hampshire Municipal Bond Bank, 1978 Resolution pool program, as assessed through the application of the U.S. Municipal Pool Program Debt methodology, to be higher than the State of New Hampshire's (Aa1 stable) moral obligation.
