$19 MILLION OF DEBT AFFECTED. RATING IS BASED ON A DIRECT PAY LETTER OF CREDIT PROVIDED BY PNC BANK, NATIONAL ASSOCIATION.
Expected Sale Date
Direct Pay - LOC
NEW YORK, Feb 4, 2011 -- Moody's Investor Services has assigned a rating of A2/VMIG 1 rating to the
Michigan Strategic Fund Limited Obligation Variable Rate Revenue Bonds
(GreenPath, Inc. Project) Series 2011 (the Bonds). The proceeds of the sale of
the Bonds will be used in financing the acquisition of land, the construction of
an approximately 125,000 square foot facility and the acquisition and
installation of furniture, fixtures and information technology-related equipment
to be located in Farmington Hills, Oakland County which will consolidate the
two existing GreenPath Inc. locations into one facility.
The rating is based upon (i) a direct-pay letter of credit (LOC) provided by PNC
Bank, National Association (the Bank), (ii) the structure and legal protections
of the transactions, which ensures timely payment of debt service and purchase
price to bondholders; and (iii) Moody's evaluation of the credit quality of the
bank issuing the letter of credit.
Moody's currently rates the Bank A2 for its long-term bank obligations and
Prime-1 for its short term obligations.
Interest Rate Modes and Payment
The Bonds will be initially issued in the variable rate mode, which resets
weekly and will pay interest on the first business day of each month. The Bonds
may be converted in whole to bear interest at the fixed or bank purchase rate
modes and are subject to mandatory tender at a price of par plus accrued
interest upon conversion. Moody's letter of credit backed rating applies to the
Bonds only while bearing interest in the variable rate mode.
The trust indenture does not allow the issuance of additional Bonds.
Flow of Funds
The trustee is instructed to draw on the letter of credit for principal and
interest by 12:00 noon, Eastern time, in order to receive payment by 1:00 p.m.,
Eastern time, on the following business day to make full and timely payments of
principal and interest on the Bonds. The trustee is also instructed to
draw under the letter of credit by 5:00 p.m., Eastern time, on the business day
prior to each purchase date, in order to receive payment by 12:30 p.m.,
Eastern time, on such purchase date for the purchase of all Bonds due
and payable to the extent that remarketing proceeds are insufficient.
Bonds which are purchased by the Bank due to a failed remarketing are held by
the trustee as pledged bonds. Pledged bonds will not be remarketed unless the
letter of credit is reinstated in full prior to or simultaneously with the
remarketing of such bonds.
Direct Pay Letter of Credit
The letter of credit provided by the Bank is sized for the full principal amount
plus 45 days of interest at a rate of 10%, the maximum rate on the Bonds. The
letter of credit provides sufficient coverage for the Bonds while they bear
interest in the variable mode.
Draws on the Letter of Credit
Conforming draws for principal and/or interest received by the Bank by noon,
Eastern time, on a business day will be honored by 1:00 p.m., Eastern time, on
the next business day. Conforming draws for the payment of purchase price
received by the bank by 5:00 p.m., Eastern time, on the business day prior to
each purchase date will be honored by 12:30 p.m., Eastern time, on such payment
Reinstatement on Interest Draws
The interest component of the letter of credit will be automatically
reinstated effective the 7th day following the payment of such draw unless
notice of non-reinstatement is received by the trustee by the 4th day following
such payment. Upon receipt of such notice, the trustee shall declare the Bonds
to be immediately due and payable. The trustee shall immediately draw on the
letter of credit. Interest shall cease to accrue upon declaration of the
Reimbursement Agreement Defaults
The Bank may send written notice to the trustee stating that an event of default
under the reimbursement agreement has occurred, and directing the trustee to
accelerate the maturity of the Bonds. Upon receipt of such notice with direction
to accelerate, the trustee shall declare the Bonds to be immediately due and
payable. The trustee shall immediately draw on the letter of credit. Interest
shall cease to accrue upon declaration of the acceleration.
Expiration/Termination of the Letter of Credit
The LOC will terminate on the earliest to occur of: (i) trustee's surrendering
of letter of credit for surrender in connection with substitution; (ii) the
expiration date, currently stated as February 16, 2016, (iii) the date on which
the Bank honors a draw for the principal and interest for all the then
outstanding Bonds (iv) 15 days following trustee's receipt of a written notice
directing the trustee to accelerate all the Bonds; or (v) the 2nd business day
following the conversion of the Bonds
Bonds are subject to mandatory tender on the effective date of an
alternate letter. The trustee may not surrender the existing letter of
credit until all required draws have been made and honored.
Bondholders may optionally tender their Bonds while in the weekly rate mode on
any business day by delivering notice at least seven days prior to the purchase
date to the trustee.
The Bonds are subject to mandatory tender on the following dates: (i) on each
proposed interest rate conversion date; (ii) upon the effective date of an
alternate letter of credit; (iii) on the interest payment date prior, which must
be at least 2 business days prior, to the stated expiration date of the letter
of credit; and (iv) on each optional redemption date for which the borrower has
elected to purchase Bonds in lieu of an optional redemption.
The Bonds are subject to mandatory redemption on the following dates: (i) upon
the determination of taxability of the Bonds; or (ii) on any interest payment
date in the amount equal to any issuance or condemnation proceeds deposited with
What Could Change the Rating-Up
Long-Term: The long-term rating on the Bonds could be raised if the long-term
other senior obligation (OSO) rating on the Bank was upgraded.
What Could Change the Rating-Down
Long-Term: The long-term rating on the Bonds could be lowered if the long-term
OSO rating on the Bank was downgraded.
Short-Term: The short-term rating on the Bonds could be lowered if the
short-term OSO rating on the Bank was downgraded.
Trustee: Bank of New York Mellon Trust Company, N.A.
Underwriter & Remarketing Agent: PNC Capital Markets LLC
The principal methodology used in this rating was Moody's Rating Methodology for
Letter of Credit Supported Transactions published in August 2005.
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
Senior Credit Officer
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S ASSIGNS A2/VMIG 1 LETTER OF CREDIT-BACKED RATING TO THE MICHIGAN STRATEGIC FUND LIMITED OBLIGATION VARIABLE RATE REVENUE BONDS (GREENPATH, INC. PROJECT), SERIES 2011
Moody's Investors Service
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