DALLAS — The YMCA of Greater Houston is no longer under threat of a downgrade by Moody's Investors Service as the nonprofit prepares to restructure its $196 million of outstanding debt.

Moody's removed the Baa3 rating from review for possible downgrade and provided a stable outlook as the YMCA plans to issue more than $100 million of refunding debt, including $51.25 million Series 2013A fixed rate bonds and $50.5 million Series 2013B variable rate demand bonds.

"The stable outlook reflects our expectation that the YMCA will conclude its debt refinancing plan within 90 days of the issuance of the Series 2013A and 2013B bonds," wrote Moody's analyst Jenny L. Maloney.

The debt is not rated by Standard & Poor's or Fitch Ratings.

Moody's downgraded the YMCA to Baa3 from Baa2 on July 29, 2011 affecting $200 million of debt outstanding issued through the Harris County Cultural Education Facilities Finance Corporation. The outlook was negative.

Analysts cited the organization's elevated leverage and debt structure risk due to thin liquidity.  

"The negative outlook reflects our expectation that the YMCA could be challenged to absorb increases to interest rates and other debt-related costs of its variable rate debt despite expense reductions taken to offset lower than projected revenues in the last couple of years,"  Moody's noted last year.

The downturn occurred as the YMCA began opening new centers after the financial collapse of 2008, financed by $200 million of variable rate debt issued that year with senior lien ratings of Aa1 from Moody's based on a letter of credit from JPMorgan Chase Bank.  The bonds, with final maturities of 2038, were remarketed by JPMorgan in 2011.

Although Houston and Harris County were affected, the economy bounced back much more rapidly due to the support of the oil and gas industry and a relatively minor bubble in housing prices.

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