Moody's Investors Service said it has assigned an Aa3 rating to the Oakland-Alameda County Coliseum Authority, Calif.'s lease revenue bonds (Oakland Coliseum Arena project) 2015 refunding Series A (federally taxable) totaling approximately $79.7 million, and upgraded to Aa3 from A1 the rating to the authority's 2012 refunding Series A lease revenue bonds totaling approximately $106.5 million.
The upgrade to Aa3 from A1 of the authority's lease revenue bonds reflects the underlying credit strength of both the county of Alameda and the city of Oakland, which are the obligors for the security, and the sustained credit improvement of the county of Alameda since the last review. The county maintains an exceptionally strong financial position with one of the highest reserve positions among the largest and most highly rated counties in the state. The county has also undergone steady economic recovery, which Moody's expect will continue.
Alameda County's Aa1 issuer rating and Aa3 lease rating reflect the county's large, growing, and diverse economy; exceptionally strong financial operations with ample reserves; and slightly above-average debt position that remains manageable for the general fund.
Oakland City's Aa2 general obligation rating and A1 lease rating are supported by the city's very large Bay Area economy that is successfully emerging from the economic downturn; improving financial position that remains constrained by increased demand for city services and rising pension and medical costs; and above-average net direct burden and elevated lease burden on the general fund.
The two-notch rating distinction between the current lease rating and the county's issuer rating represents Moody's standard notching for essential purpose, fixed-asset leases relative to a California issuer's general obligation rating (equivalent to an issuer rating). The two notches reflect the risk of abatement (and the lack of seismic insurance coverage) and the narrower, general fund security pledge for leases compared to the unlimited property tax pledge security general obligation bonds. While the Arena does not meet the typical definition of essentiality, this weakness is offset by the high credit quality of the obligors.
