Moody's Investors Service said it has downgraded the rating on the First Florida Governmental Financing Commission's improvement and refunding revenue bonds, Series 2002 ($9.185 million outstanding) to A2 from A1.
Concurrently, Moody's has affirmed the ratings on First Florida's remaining outstanding bond issues, totaling $73.665 million; these issues carry different securities.
Moody's has reassessed the First Florida structure using the "Weak Link Plus," which places greater emphasis on the probability of default by the weakest participant of the pool but, in most cases, provides for modest rating lift recognizing the decreased loss given default of the transaction due to the presence of higher rated participants.
However, in no case will the level of rating lift exceed the weighted average rating of the pool participants.
All affirmed ratings were also determined using the "Weak Link Plus" approach, although the pool financing methodology's weighted average approach would have arrived at the same rating in each case as well.
Moody's applies the "Weak Link Plus" approach on pool financings that do not include a structural enhancement such as a fully funded debt service reserve fund or a step-up provision for payment deficiencies. In cases where is such an enhancement, Moody's applies a weighted average approach.
The downgrade is related to the city of Gainesville (non-ad valorem rated Aa3) paying off its portion of the loan and the resulting change in the profile of the pool.
Prior to July 1, pool participants included Gainesville, Broward County (non-ad valorem rated Aa1), and city of Hollywood (non-ad valorem rated A2). On July 1, Gainesville made its remaining semi-annual payments and as a result is no longer a participant.
As above, this rating was analyzed with the "Weak Link Plus" approach, as there are no enhancements to the structure; however, with the weighted average approach it would be an A2 rating as well.