Fitch Ratings assigns a AA-plus rating to approximately $48.5 million of California Infrastructure and Economic Development Bank infrastructure state revolving fund revenue bonds, Series 2008.
In addition, Fitch has upgraded the CIEDB’s $97.1 million of outstanding infrastructure state revolving fund, or ISRF, revenue bonds to AA-plus from AA. The rating outlook is Stable.
The Series 2008 bonds are scheduled to price during the week of Sept. 8. Bond proceeds will be used to reimburse the infrastructure bank for eight bond anticipation loans made from its internal funds, make approximately five new infrastructure loans to government entities within the state, and to fund the debt service reserve fund and issuance costs.
The rating upgrade to AA-plus reflects incremental growth and diversification of CIEDB’s ISRF pool, which has expanded to 70 borrowers from 47 in 2005. The largest borrower, San Bernardino, accounts for approximately 10% of the portfolio loan balance and the top 10 borrowers account for 47% of the total outstanding loan balance. Management expects the pool to continue to grow given continued demand for future financing under the program.
The rating also reflects the significant amount of overcollateralization provided for series 2008 and all outstanding revenue bonds in the form of pledged master and parity series loan receipts, which are currently projected to provide a minimum 1.69 times coverage over the life of the bonds. The rating also considers the additional bonds test requirement of 1.20 times, which could lead to notably lower coverage on the Series 2008, 2005, and 2004 bonds, and future series of bonds.