Bangkok--6 May--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AA+' long-term rating, and stable outlook, to the Arizona Transportation Board's $440 million transportation excise tax revenue bonds (Maricopa County Regional Area Road Fund) series 2009. At the same time, we affirmed our 'AA+' long-term rating, with a stable outlook, on the Regional Area Road Fund parity series 2007 bonds outstanding.
The bonds are secured by a sales tax collected within Maricopa County and dedicated for road improvement purposes.
The rating reflects what we consider a very large and diverse economic base covering Maricopa County ('AAA' issuer credit rating), which generates the pledged sales tax; and high 3.54x coverage by fiscal 2008 pledged revenues of future maximum annual debt service (MADS) after this issuance. The rating also reflects what we view as the county's recent historical and projected declines in sales tax collections; no current plans for additional parity debt issuance until 2011; and strong 2x additional bonds test.
"The stable rating outlook reflects our opinion of the very diverse nature of the county's large and growing economic base generating the pledged tax, combined with very strong coverage of MADS, though we believe this is slightly offset by declining pledged sales taxes and $1.5 billion of expected additional parity or subordinate bonding," said Standard & Poor's credit analyst David Hitchcock. However, in Standard & Poor's view the 2x senior-lien additional bonds test provides strong protection against future debt dilution.
The bonds are secured by a first lien on a dedicated excise (sales) tax collected within Maricopa County at the rate of approximately 6.67% of the state sales tax rate. The pledged tax is collected by the state on behalf of the county. Voters authorized the tax for a 20-year period expiring Dec. 31, 2025. Pledged tax revenue is held in trust for the bondholders in a state fund by the state treasurer.
Bond proceeds will be used to pay for the design, right-of-way purchase, and construction of various freeways and other roads within the county.
Maricopa County, which includes the city of Phoenix, Ariz., is the state's major economic, political, financial, and population center; it enjoys what we view as a diverse economy that includes trade, mining, construction, tourism, high-tech manufacturing, and significant governmental employment.
RELATED RESEARCH
USPF Criteria: "Special Tax Bonds," June 13, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
David G Hitchcock, New York (1) 212-438-2022
Matthew Reining, San Francisco (1) 415-371-5044