Moody's Investors Service said it has placed the A2 rating of the Public Gas Partners — gas project revenue bonds (Gas Supply Pool 1) under review for downgrade.
The issuer rating is also under review.
The rating action impacts $101.750 million of the outstanding Series A revenue bonds. Moody's expects to conclude its review within 90 days.
Today's action is based on the declining economic benefit of the gas pools, negative outlook on major participant Municipal Gas Authority of Georgia, and failure to observer certain flow of funds requirements contained in the trust indenture with respect to funding of the debt service reserve.
The review will focus on the competitiveness of gas delivered by PGP from Pool 1 to member participants, the degree of interconnectedness between MGAG and PGP with respect to liquidity, and the adequacy of financial controls for PGP.
MGAG has indicated that revenues were inadvertently not being deposited into the debt service fund of PGP on a monthly basis in accordance with the trust indenture.
Revenues were instead being used to pay down parity debt obligations to MGAG in an effort to reduce interest expense.