Stable outlook applies to state's $1.85 billion in outstanding first lien and $880 million in second lien gas and fuels tax bonds
New York, May 02, 2013 --
Moody's Rating
Issue: Gasoline and Fuels Tax Revenue Refunding Bonds, 2013
Series A; Rating: Aa1; Sale Amount: $173,000,000;
Expected Sale Date: 5-15-2013; Rating Description:
Revenue: Government Enterprise
Issue: Gasoline and Fuels Tax Revenue Refunding Bonds, 2013
Series B-1 (LIBOR Index); Rating: Aa2; Sale Amount:
$200,000,000; Expected Sale Date: 5-15-2013;
Rating Description: Revenue: Government Enterprise
Issue: Gasoline and Fuels Tax Revenue Refunding Bonds, 2013
Series B-2 (LIBOR Index); Rating: Aa2; Sale Amount:
$103,125,000; Expected Sale Date: 5-15-2013;
Rating Description: Revenue: Government Enterprise
OPINION
Moody's Investors Service has assigned a long-term rating of Aa1
to $173 million State of Louisiana Gasoline and Fuels Tax Revenue
Refunding Bonds, 2013 Series A and a long-term rating of
Aa2 to $200 million State of Louisiana Gasoline and Fuels Tax Revenue
Refunding Bonds, 2013 Series B-1 (LIBOR Index) and $103.125
million State of Louisiana Gasoline and Fuels Tax Revenue Refunding Bonds,
2012 Series B-2 (LIBOR Index). The First Lien bonds will
modify the call date on certain 2006 A bonds and the Second Lien bonds
will refund certain maturities of the state's outstanding Second Lien
Gas and Fuels Tax Revenue bonds which have mandatory tenders in 2013.
They are scheduled to price May 15.
SUMMARY RATING RATIONALE
The Aa1 on the First Lien bonds reflects the closed lien and strong debt
service coverage. The Aa2 rating on the Second Lien bonds reflects
the healthy coverage provided by the pledged revenues, even in stressed
scenarios, the lack of appropriation risk, and the legislative
approval required for additional bonds. Louisiana's general obligation
bonds are rated Aa2, with a stable outlook.
STRENGTHS
- Strong legislative support
- No appropriation risk
- Pledged revenues are constitutionally dedicated to transportation
projects
- Expected revenues provide healthy coverage of senior and subordinate
bond debt service
CHALLENGES
- No debt service reserve fund
- Volatile revenue history
OUTLOOK
The outlook for the State of Louisiana Gasoline and Fuels Tax Revenue
Bonds is stable. The fuel tax has proven to be a relatively resilient
revenue source, even in the post-Katrina period, and
the strong coverage and lack of appropriation risk lend stability to the
credit.
WHAT COULD MAKE THE RATING GO UP
-Structural changes that strengthen the bonding program
WHAT COULD MAKE THE RATING GO DOWN
-Severe declines in pledged revenues or other changes that cause
a major reduction in coverage levels
-Increase in exposure to variable rate debt.
The principal methodology used in this rating was US Public Finance Special
Tax Methodology published in March 2012. Please see the Credit
Policy page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Andrew Nowicki
Associate Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Marcia Van Wagner
Vice President - Senior Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns Aa2 to approximately $303 million State of Louisiana Gas and Fuels Tax Second Lien Revenue Refunding Bonds, also assigns Aa1 to $173 million State of Louisiana Gas and Fuels Tax First Lien Revenue Refunding Bonds