Published: August 20, 2010
Fitch Upgrades Missouri School District Direct Deposit Program to 'AA+'; Outlook Stable
NEW YORK - (BUSINESS WIRE) - Fitch Ratings takes the following rating action as part of its
continuous surveillance effort:
--Missouri School District Direct Deposit Program upgraded to 'AA+' from
'AA'.
The Rating Outlook is Stable.
RATING RATIONALE:
--The upgrade reflects the strong structural, legal, and administrative
protections of the Direct Deposit Program (the program).
--The structure of the program provides for full and timely payment of
debt service from state aid payments.
--Pursuant to program guidelines, participating school districts are
required to demonstrate 1.5 times (x) coverage of maximum annual debt
service by state aid monies allocated to debt service, both in the year
of issuance and in the two prior fiscal years.
KEY RATING DRIVERS:
--Missouri's overall credit quality, as reflected by the 'AAA' general
obligation (GO) bond rating, upon which this program rating is based.
--Changes in the statutes, regulations, or administrative procedures
governing the credit enhancement program.
SECURITY:
Program bonds are enhanced by the state's obligation to directly deposit
state aid payments with the trustee.
CREDIT SUMMARY:
Upon request, Fitch will assign a 'AA+' rating to Missouri school
district GO bonds qualifying for participation in the Direct Deposit
Program. The program rating is based on the ability of Missouri school
districts to apply for direct deposit of monthly state aid payments to a
trustee to pay debt service, the program's requirement for debt service
coverage of at least 1.5 times (x) maximum annual debt service by
current and past aid revenues, as well as the state's general credit
condition, expressed in its 'AAA' GO bond rating.
The structure and mechanics of the program provide for full and timely
payment of debt service from state aid payments. Program guidelines
enable school districts to request that the state send the first dollars
of monthly state aid distributions to a debt payment trustee in 10
approximately equal monthly installments. The trustee transfers moneys
to the district's paying agent no later than one day prior to the debt
service payment date. The 10-month timeline for fulfilling annual debt
service needs provides a two-month cushion to intercept additional
available state aid moneys, if needed, for bondholders' benefit.
Participating school districts must maintain debt service or capital
projects tax levies sufficient to retire the bonds and may finance
general operations with these funds through transfers structured to
coincide in amount and timing with state aid moneys captured by the
direct deposit mechanism for bondholders' benefit. Projected debt
service must have been covered in the year of bond issuance and in the
two preceding fiscal years at least 1.5x by state aid receipts.
Additional information is available at 'www.fitchratings.com'
Related Research:
'Tax-Supported Rating Criteria', dated Aug. 16, 2010.
'State Credit Enhancement Program Criteria', Dec. 16, 2009.
'U.S. State Government Tax-Supported Rating Criteria', dated Dec. 28,
2009.
For information on Build America Bonds, visit www.fitchratings.com/BABs.
Related Research:
State Credit Enhancement Program Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=491794
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE.
Fitch Ratings
Primary Analyst
Alexandra Edwards
Associate
Director
+1-212-908-9181
One State Street Plaza
New York
NY 10004
or
Secondary Analyst
Douglas Offerman
Senior
Director
+1-212-908-0889
or
Committee Chairperson
Laura
Porter
Managing Director
+1-212-908-0575
or
Media
Relations
Cindy Stoller
+1-212-908-0526
cindy.stoller@fitchratings.com
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