Moody's Investors Service has placed under review for possible upgrade the ratings on the tax allocation bonds of 45 successor agencies to former California redevelopment agencies, affecting $5.6 billion in debt.

Moody's has updated methodology for tax increment debt nationally, but only California tax allocation bonds are being reviewed, according to the June 24 report. The review, expected to be completed within 90 days, could result in one- and three-notch upgrades, Moody's wrote.

The scorecard contains both a "standard approach" that applies to tax increment debt nationally and a "California TABs Approach."

The California review evaluates the unique features of the state's TABs after the legislative dissolution of the state's redevelopment agencies in 2012 and the legal structure and framework governing the debt post-dissolution, according to Moody's.

Moody's cited "the relatively smooth implementation of legislative changes over the last three years," which led to the timely payment of debt service on California TABs, as a factor in its analysis.

The primary factors considered by the scorecard are the characteristics of the project area and the tax base to include size, volatility, socioeconomic and economic diversity, as well as the financial strength of the project area, and the debt provisions and legal structure of the bonds, Moody's wrote.

Moody's had solicited comments on the proposed methodology. Market comments led to several adjustments to the methodology's scorecard, analysts wrote.



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