Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
29 Nov 2010
NEW YORK, Nov 29, 2010 -- Moody's has affirmed its P-1 rating on the State of Tennessee's Series A
(Tax-Exempt) and Series B (Federally Taxable) general obligation commercial
paper. The rating reflects the strong liquidity support provided to the notes
through a standby commercial paper purchase agreement provided by the Tennessee
Consolidated Retirement System (TCRS) and the substantial resources of TCRS
available to support its commitment to purchase commercial paper, if required.
The credit strength of the state of Tennessee (the state), whose general
obligation bonds are rated Aaa with a stable outlook, is also considered
in light of the automatic termination events outlined in the liquidity
COMMERCIAL PAPER PROGRAM WILL FUND CAPITAL INVESTMENTS; BONDS MAY BE ISSUED TO
TAKE OUT CP
The issuance of commercial paper is part of an initial $250 million general
obligation bond anticipation note program authorized by a March 6, 2000
resolution of the State Funding Board, which was amended and restated August 5,
2009 to allow for an increase in authorization to $350 million general
obligation bond anticipation note. All notes issued under the program are direct
general obligations of the state, bearing its full faith and credit pledge for
The Series A and B commercial paper will fund various infrastructure
improvements to state facilities. The commercial paper will have varying
maturities of not more than 270 days from their respective dates of issuance
and no later than the sixth business day prior to the expiration of the
TCRS standby agreement. The state expects maturing commercial paper to be paid
through the issuance of bonds or additional commercial paper.
AGREEMENT WITH TCRS PROVIDES LIQUIDITY
The state has entered into a Standby Commercial Paper Purchase Agreement with
the TCRS under which the TCRS is obligated to purchase commercial paper that
cannot otherwise be rolled over to new holders. Established in 1972, TCRS is the
retirement system for public employees of Tennessee.
While payment of commercial paper principal and interest is backed by the
state's general obligation pledge, the P-1 rating is derived from the strength
of the agreement with TCRS and the ample resources TCRS has available to honor
its obligations under the agreement. The state's long-term general obligation
bond rating is also considered in the rating because of the automatic
termination events incorporated in the liquidity agreement. The commercial paper
resolution limits the total amount outstanding to $350 million. The
standby agreement further limits the amount of notes that can mature on any
one day to $100 million. Through the standby agreement, TCRS is required to
purchase any notes that cannot otherwise be paid from rollover proceeds.
Pursuant to the governing documents, should TCRS receive notice by 12:00 Noon,
New York City time, from the Issuing and Paying Agent (Deutsche Bank Trust
Company Americas) specifying the principal amount of commercial paper that the
Dealer (Morgan Stanley & Co. Incorporated) was unable to sell to pay the
principal of outstanding commercial paper maturing on the same day, TCRS
will purchase such maturing commercial paper on that day by 4:00 P.M., New York
The standby agreement expires on April 1, 2015. It may be terminated earlier by
either the state or TCRS upon notice from either party. Such notice period must
exceed the number of days to maturity of any outstanding commercial paper, and
if terminated by TCRS, directs the Issuing and Paying Agent to immediately cease
further issuance of commercial paper.
The rating also reflects the likelihood of premature termination of the standby
agreement without payment of the commercial paper notes. Events which would
cause the standby agreement to terminate without payment of the commercial paper
notes are directly related to the credit quality of the state. The rating is
also based on the state's obligation for the payment of interest on maturing
notes, which is on parity with its general obligation long-term bonds. The
automatic termination events include: (i) the state's failure to pay
interest owing on the commercial paper; (ii) the issuance of the
commercial paper resulting in a violation by the state of any law or state
agreement, pursuant to a final administrative or judicial decision; (iii)
the validity or enforceability of legal documents related to the
commercial paper program being contested by the state or the state denying it
has any or liability or obligation under these documents; (iv) the
rating assigned to the commercial paper falling below P-3; (v) the state
imposing a debt moratorium, debt restructuring, debt adjustment or comparable
restriction on debt service repayment related to any state obligations, or
taking any action to refuse to pay its debts or comply with its lawful
obligations with regard to the commercial paper, or any other general obligation
notes or bonds issued by the state; or (vi) bankruptcy or insolvency of the
The amount of liquid investments available to TCRS to meet obligations under the
agreement is ample. Based on our modified approach as outlined in the Moody's
rating methodology of November 2006 entitled "Variable Rate Debt
Instruments Supported by an Issuer's Own Liquidity", liquid investments
available to TCRS to meet obligations under the agreement provide over twenty
times coverage of the total amount of commercial paper authorized to be sold.
MOST RECENT RATING ACTION; METHODOLOGY
The last rating action with respect to Tennessee General Obligation
Commercial Paper Series A (Tax-Exempt) and Series B (Federally Taxable) was on
August 12, 2009, when the P-1 rating was affirmed.
The principal methodology used in rating this issue was Moody's Variable Rate
Debt Instruments Supported By an Issuer's Own Liquidity, which can be found at
www.moodys.com in the Credit Policy & Methodologies directory, in the
Ratings Methodologies subdirectory. Other methodologies and factors that may
have been considered in the process of rating this issue can also be found in
the Credit Policy & Methodologies directory.
Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.
Public Finance Group
Moody's Investors Service
Public Finance Group
Moody's Investors Service
Senior Credit Officer
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S AFFIRMS P-1 RATING ASSIGNED TO STATE OF TENNESSEE'S $350 MILLION GO COMMERCIAL PAPER
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.