Fitch rates Vermont Muni Bond Bank’s $9.5 million Gen Res program bonds ‘AA’; outlook stable

first_imgFitch Ratings assigns an ‘AA’ rating to the following 2011 Vermont Municipal Bond Bank bonds, issued under the 1988 General Resolution:–$9,500,000 (federally taxable qualified school construction bonds) 2011 series 1.The bonds are expected to sell via negotiation on March 9, 2011. Bond proceeds will be loaned to two local school districts for capital improvements.In addition, Fitch affirms $516,930,000 in outstanding general resolution bonds at ‘AA’.The Rating Outlook is Stable.RATING RATIONALE:–The program’s pledged reserves and loan repayments, excluding federal subsidies, allow the bonds to withstand borrower defaults of up to 17.22% for four years without causing an interruption in bond payments. This is consistent with Fitch’s criteria for assigning an ‘AA’ rating given the loan pool’s borrowers’ credit quality, size and diversification.–The program, which consists of more than 260 borrowers, is diverse with low single-borrower concentration.–The program’s loan security is strong, with approximately 97% of all loans backed by a general obligation pledge and additional protection from borrower defaults through a state-aid intercept mechanism.KEY RATING DRIVERS:–The bond bank’s ability to balance future leveraging with program resources to maintain borrower default tolerance levels that pass Fitch’s ‘AA’ stress test scenarios is important to maintain the rating.–Credit quality of the bonds is also linked to repayment performance on the program’s loan portfolio.SECURITY:Program bonds are secured by borrower loan repayments and debt service reserve funds. A state moral obligation on the reserve fund and a state-aid intercept provision for borrowers provide additional credit enhancement.CREDIT SUMMARY:Established in 1970, The Vermont Municipal Bond Bank (VMBB) is a quasi-state agency. It is administered by a five-member board consisting of four gubernatorial appointees and the state treasurer. The bond bank issues bonds and uses the proceeds to make loans to local government borrowers throughout the state. Virtually all of Vermont’s eligible municipalities use the bond bank as their primary borrowing vehicle because it offers local government borrowers the lowest cost of capital.The loan pool consists of more than 260 borrowers from cities, towns, counties, school districts and other local governments throughout the state. Approximately 97% of all loans are backed by a general obligation pledge; the remaining are backed by utility pledges from five borrowers. About 52% of the loans are to school districts, which are further backed by an intercept mechanism that includes any state funds payable to borrowers. State aid is reportedly over 90% of school district debt service. The loan portfolio’s largest borrower, Springfield School District, comprises only 5% of the portfolio. The top 10 borrowers account for 32% of the total outstanding loan balance.Fitch analyzed the default tolerance of the VMBB loan pool using a stress test it also applies to state revolving funds and other municipal loan pools. The stress test considers loan quality, single risk concentration, reserve fund size, and debt service requirements. The program’s pledged reserves and loan repayments, excluding the federal subsidies, allow the bonds to withstand borrower defaults of up to 17.2% for four years without causing an interruption in bond payments. This is consistent with Fitch’s criteria for assigning an ‘AA’ rating given the loan pool’s borrowers’ credit quality, size and diversification (17.09%).With the 2011 -1 issue, VMBB offers its fourth series of federally subsidized bonds, Qualified School Construction and Recovery Zone Economic Development, which provide 0% and 45% in interest rate subsidies, respectively, offsetting the pool participants’ cost of borrowing. However, as the pool continues to leverage these issues, the program’s cash flow margins become tighter under Fitch’s stressed scenarios, which assume that no scheduled federal debt service subsidies are received. Per its report ‘Build America Bonds Broaden Municipal Market – Credit Considerations’ dated April 27, 2010, Fitch assesses the ability of the issuer to pay full interest on the BABs, regardless of the subsidy. While Fitch believes there could be offsets to some annual subsidy payments, it believes that VMBB management would take action to address the reasons for the offset and avoid multiple years with no subsidy, including the use of certain optional redemption provisions for its federally subsidized bonds. Nevertheless, the bond bank’s ability to balance future leveraging with program resources to maintain borrower default tolerance levels that pass Fitch’s ‘AA’ stress test scenarios is important to maintain the rating.The program’s debt service reserve fund, which is sized at the least of maximum annual debt service, 125% average annual debt service, or 10% of bond proceeds, is funded with bond proceeds and invested in U.S. treasury and agency securities. Pledged reserves, currently total $49.9 million, or 9.7% of bonds outstanding. In addition, the bank maintains approximately $10.9 million in unrestricted general fund reserves, which are not pledged to bondholders but may be used if a deficiency occurs. The bonds are also supported by a state moral obligation to replenish the debt service reserve fund if it falls below its minimum specified level. Neither the intercept nor the moral obligation has ever been utilized, because no borrower has defaulted on a loan repayment since the bond bank began operations in 1970.Loan payments are due 15 days before the bond payment dates. Under Vermont’s state intercept provision, if a borrower fails to make its scheduled loan repayment, the bond bank will certify the failure of that payment with the state treasurer. The state treasurer would then pay the defaulted loan amount to the bank’s trustee from amounts appropriated and payable by the state to the defaulted borrower, if available. If sufficient state aid is unavailable, it will be paid from subsequent interceptable state aid payments, with bond bank reserves covering the temporary shortfall. To date, this mechanism has not been tested as there have not been any loan defaults in the history of the program.Additional information is available at www.fitchratings.com(link is external).Applicable Criteria and Related Research:–‘Revenue-Supported Rating Criteria’ (Oct. 8, 2010);–‘State Revolving Fund and Municipal Loan Pool Rating Guidelines’ (April 28, 2008);–‘Build America Bonds Broaden Municipal Market – Credit Considerations’ (April 27, 2010).For information on Build America Bonds, visit www.fitchratings.com/BABs(link is external).Applicable Criteria and Related Research:Revenue-Supported Rating Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=5…(link is external)State Revolving Fund and Municipal Loan Pool Rating Guidelineshttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=3…(link is external)Build America Bonds Broaden Municipal Market — Credit Considerationshttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=5…(link is external)  CHICAGO–(BUSINESS WIRE)–last_img read more

Unions pull representatives from Dutch scheme’s oversight board

first_imgThree unions have withdrawn their representatives from the accountability body (VO) of the Dutch sector scheme for dental technicians at the urgent request of the pension fund’s board.The board of Tandtechniek had ruled out further co-operation with the VO, which represents the scheme’s membership, as the accountability body was considering an appeal against a verdict from the Netherlands’ corporate court.The board feared that this could further delay the ailing pension fund’s plan to join the €197bn healthcare scheme, scheduled for 1 October.Last month the corporate court rejected the VO’s request for an investigation into alleged mismanagement by Tandtechniek’s board. The VO also asked to replace the board by an administrator. The court ruled that the body’s responsibilities weren’t as extended as it thought. Henk van der Meer, employee chair of Tandtechniek, said: “We don’t have time for such an appeal procedure, and we aren’t actually interested in it either. This will demand energy which we [would] rather spend on the collective value transfer.”Following a meeting with the accountability body, the board did not believe the VO would change tack either, Van der Meer added.He said that Wolter Jagt, employer representative in the VO, had already stepped down of his own accord as he didn’t agree with the decision to appeal the court’s ruling. The Tandtechniek scheme faces more cuts when it joins PFZW in October‘Give members more say’Responding to the developments, Arie Slottje – now also a former VO member – suggested that the board had obstructed the regular judicial process, as its request to the unions had effectively blocked the VO’s appeal option.In his opinion, the court hadn’t really addressed the questions posed by the VO, instead ruling that that the VO could not do anything whereas the board could do as it pleased.“The participants who pay can’t decide or ask anything, but are subject to risks and losses,” he said.Slottje referred to the low funding of Tandtechniek, which stood at 92.7% of liabilities at year-end, following several rounds of rights cuts during the past few years.Joining PFZW, which has a coverage ratio of 98.6%, would make additional cuts inevitable.Citing Tandtechniek’s annual report over 2016, Slottje said that participants had already lost at least 20% of their pension rights. “The chances to make up for this are virtually zero,” he said.Slottje, who took his PhD on decision-making processes at company pension funds, argued that participants themselves should get an increased say at the expense of the unions, “as unions represent no more than 18% of the Dutch working population”.last_img read more

Elijah Hughes receives NBA Draft Combine invite

first_img Facebook Twitter Google+ But logistics about the draft combine remain in flux. Prospects were sent emails containing disclaimers stating that a date, location and format — as well as whether the actual combine will take place — haven’t been decided on yet, ESPN’s Jonathan Givony reported. “The purpose of this email is to notify you of your standing invitation to the Combine as the league office continues to monitor the pandemic and consult with infectious disease specialists, public health experts, and government officials,” an example email to prospects said, according to Zagoria.The NBA is currently attempting a restart of its suspended season, housing all players, coaches and essential staff in an Orlando bubble. Its draft was originally scheduled for June 25 but has been pushed back to Oct. 16, six weeks after the season resumes. Hughes announced his decision to enter the draft March 21 and declared his intention to remain in the draft and forego his senior season one month later.After transferring from East Carolina following the 2016-17 season, Hughes became the Orange’s offensive focal point last year. The first-team All-ACC replaced Tyus Battle as the primary scorer, leading the conference in total points (609), and has since been pegged as a second-round pick in recent mock drafts. Comments Former Syracuse forward Elijah Hughes has received an NBA Draft Combine invitation, according to Adam Zagoria. While the combine’s date, location and format all remain unknown, Hughes told Syracuse.com that the invite is “very exciting.” Hughes, who averaged an Atlantic Coast Conference-leading 19.0 points per game last season, was part of a 105-player list the NBA gave to general managers for combine-invite voting. The top 60 or 70 prospects traditionally receive a spot.center_img Published on July 27, 2020 at 3:12 pm Contact Andrew: [email protected] | @CraneAndrewlast_img read more