Bangkok--14 Aug--Standard & Poor's
Standard & Poor's Ratings Services revised its rating to 'A/A-1' from 'BBB+/A-2' on Michigan Strategic Fund's variable-rate demand limited-obligation bonds, series 2004 and 2005, issued on behalf of the YMCA of Greater Grand Rapids Project. The rating change is based on the substitution of the existing letters of credit (LOCs) from Fifth Third Bank (BBB+/A-2) with two separate LOCs provided by Comerica Bank (A/A-1), effective Aug. 13, 2009. The new LOCs shall provide coverage for principal plus 45 days of interest at the maximum rate of 10% for payment of debt service as well as the purchase price of bonds that are not successfully remarketed. The LOCs are scheduled to expire on Jan. 18, 2013, unless earlier extended or terminated according to their terms.
The bonds currently bear interest in a variable- (weekly-) rate mode. Conversion to the fixed-rate mode requires rating maintenance and confirmation that sufficient coverage is in place under the LOCs. Bondholders may tender their bonds during the variable-rate mode upon delivering seven days' notice. The bonds are subject to mandatory tender upon conversion to fixed rate, substitution, or prior to expiration of the LOCs. Bonds will be subject to acceleration upon an event of default under the reimbursement agreement or nonreinstatement of interest under the LOCs.
RELATED RESEARCH
Criteria: Methodology And Assumptions: Approach To Evaluating Letter Of Credit-Supported Debt, July 6, 2009
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