Standard & Poor's Ratings Services said it has raised its ratings on Orlando, Fla.'s series 2008A (first-lien) tourist development tax (TDT) revenue bonds to BBB from BB, series 2008B TDT (second-lien) bonds to BBB-minus from CCC, and 2008C TDT (third-lien) bonds to CCC-plus from CC.
The outlook on all ratings is stable.
"The rating actions reflect improving TDT collections, which secure the bonds and have resulted in a steady decline in the amount of reserves used to fund third-lien debt service payments," said Standard & Poor's credit analyst Hilary Sutton. "The revenue environment has improved such that city officials expect TDT receipts to fully cover 2015 debt service requirements across all three liens."
In addition, officials expect excess TDT revenues in 2015, which will allow the city to begin restoring the third-lien reserves to required levels. The upgrade also reflects our view that the risk of principal acceleration across all three liens--a remedy following an event of default under any single lien--has decreased due to the improving liquidity of the third lien.
