Moody’s Investors Service Friday placed on negative watch for downgrade the Aaa long-term ratings of several gas prepay bond issues due to the Royal Bank of Canada’s Aaa long-term rating also being placed on watch for possible downgrade.
There is no change to the VMIG-1 short-term ratings.
The deals affected were:
• The New Mexico Municipal Energy Acquisition Authority’s gas supply variable-rate revenue bonds, Series 2009.
• The Lancaster Port Authority gas supply variable-rate revenue bonds, Series 2008.
• Main Street Natural Gas Inc. gas project variable-rate revenue bonds, Series 2010A.
• The Central Plains Energy Project gas project variable-rate revenue bonds, Project No. 2, Series 2009.
For each transaction, the long-term portion of the ratings are based upon the credit quality of RBC as the supplier under the gas purchase agreement, the funding and assignment agreement provider, and the interest-rate swap provider.
The VMIG-1 ratings are based upon the credit quality of Royal Bank of Canada as the standby bond purchase agreement provider.
The rating of the bonds does not incorporate the rating of the commodity swap provider.
Nonpayment by the commodity swap provider is covered by RBC through a back-end commodity swap and a custody agreement.
