A1 issuer rating assigned
New York, May 08, 2013 --
Moody's Rating
Issue: Library Improvement Revenue Refunding Bonds, Series
2013; Rating: A2; Sale Amount: $4,225,000;
Expected Sale Date: 5-21-2013; Rating Description:
Lease Rental: Other
Opinion
Moody's Investors Service has assigned an A2 lease revenue rating to the
Reed Memorial Library's (City of Ravenna, OH) $4.2
million Library Improvement Revenue Refunding Bonds, Series 2013.
Concurrently we have assigned an initial A1 issuer rating to the library.
Post-sale, the library will have $4.2 million
of outstanding lease revenue debt.
SUMMARY RATING RATIONALE
The bonds will be issued by the City of Ravenna (A2 rating) but will be
the sole obligation of the library. The bonds are secured by lease
payments made by the library to the city which are absolute and unconditional
obligations of the library not subject to annual appropriation.
The bonds do not benefit from a dedicated debt service levy, but
the library has historically made its lease payments from a 1.6
mill 30 year operating levy and intends to continue that practice although
the library can use any available revenue to make the payments.
Proceeds of the bonds will be used to refund the library's outstanding
Series 2003 Library Improvement Bonds for net present value savings.
Assignment of the initial A1 issuer rating is based on the library's
modestly sized tax base with below average income indices; sound
financial operations and healthy reserve levels; and modest debt
burden with no future borrowing plans. Assignment of the A2 lease
revenue rating, one notch below the issuer rating, rating
reflects the unconditional obligation to make rental payments; the
essential nature of the pledged asset; the lack of a dedicated debt
service levy; high debt service expenditures as a percentage of revenues,
and the underlying credit characteristics of the library.
STRENGTHS
- Sound financial operations with healthy reserve levels
- Recently passed operating levy which diversified revenue streams
CHALLENGES
- Recent valuation declines
- Below average resident income indices
- Slow principal amortization
- High debt service expenditures as a percentage of revenues
WHAT COULD CHANGE THE RATING UP
- Significant tax base expansion and improvement in resident income
indices
- Continue diversification of operating revenues and growth in
reserve levels
- Moderating of debt service expenditures as percentage of revenues
WHAT COULD CHANGE THE RATING DOWN
-Weakening of tax base valuations and/or socio-economic
-Protracted expenditure over-runs leading to declined in
reserve levels
PRINCIPAL METHODOLOGY
The principal methodology used in rating the issuer rating was General
Obligation Bonds Issued by US Local Governments published in April 2013.The
principal methodology used in rating the lease revenue bonds was The Fundamentals
of Credit Analysis for Lease-Backed Municipal Obligations published
in December 2011. 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.
Chandra Ghosal
Associate Analyst
Public Finance Group
Moody's Investors Service, Inc.
100 N Riverside Plaza
Suite 2220
Chicago, IL 60606
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Jeffery Yorg
Asst Vice President - 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 initial A2 lease revenue rating to Reed Memorial Library's (City of Ravenna, Ohio) $4.2 million Library Improvement Revenue Refunding Bonds, Series 2013