LOS ANGELES — Moody's Investors Service affirmed an Aa1 rating with a stable outlook on $382 million in outstanding Idaho Bond Bank Authority revenue bonds ahead of plans to price $12.8 million on Nov. 6.
The rating reflects the broad pledge of the state's sales tax revenues that provide ample coverage for debt service, Moody's analysts said in the report released Oct. 27.
The stable outlook is based on an expectation of continued solid coverage of debt service by sales tax revenues and continued improvement in state sales tax collections.
Proceeds from the current offering will be loaned to two participants to refund previously issued Idaho Bond Bank Loans for annual debt service savings and used to provide funding to construct a new wastewater treatment facility, analysts said.
The current offering is secured by each of the participant's pledge of net wastewater system revenues.
The state also has an intercept mechanism that provides additional security, Moody's said, in which intergovernmental revenues due to participants would be transferred directly to the trustee to pay debt service if payments have not been received sufficiently in advance of debt service payment dates.
The bonds are further secured by a pledge of the state's sales tax revenues that will be transferred directly to the trustee for debt service if bond payments have not been received within five days of the payment date.
The strengths cited by Moody's analysts include the continued improvement in state sales tax revenues and multiple layers of security backing debt payments.
The challenges listed are a moderate borrower concentration and that the state's sales tax pledge also backs two school bond guaranty programs on a parity basis, resulting in further leveraging of a primary state revenue stream.
