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MOODY'S ASSIGNS Aa3/P-1 LETTER OF CREDIT BACKED RATING TO CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY RECOVERY ZONE FACILITY REVENUE BONDS (SUNPOWER CORPORATION - HEADQUARTERS PROJECT) SERIES 2010

23 Dec 2010

$30 MILLION OF DEBT AFFECTED. THE RATINGS ARE SUPPORTED BY THE LETTER OF CREDIT PROVIDED BY BARCLAYS BANK PLC

SunPower Corporation - Headquarters
Fully Supported
CA

Moody's Rating

ISSUE

RATING

Ser. 2010

Aa3/P-1

  Sale Amount

$30,000,000

  Expected Sale Date

12/29/10

  Rating Description

Letter of Credit - Direct Pay

 

Opinion

NEW YORK, Dec 23, 2010 -- Moody's Investors Service has assigned a rating of Aa3/P-1 to the $30,000,000 California Enterprise Development Authority's Recovery Zone Facility Revenue Bonds (SunPower Corporation - Headquarters Project) Series 2010 (the Bonds). The Bonds are being issued to provide funds to SunPower Corporation which will finance a portion of the cost of the construction, renovation and equipping of a new headquarters office and solar technology facility.

RATINGS RATIONALE

The rating on the Bonds is based upon the letter of credit (LOC) provided by Barclays Bank, PLC (the Bank); the structural and legal protections of the transaction, which ensure timely debt service and purchase price payments to bondholders; and Moody's evaluation of the credit quality of the bank issuing the LOC.

Moody's currently rates Barclays Bank, PLC Aa3 for its long-term deposits and P-1 for its short-term deposits.

Interest Rate Modes and Payment

The Bonds will initially bear interest in a weekly rate mode and will pay interest on the first business day of each month. The first interest payment date will be January 3, 2011. The interest rate on the Bonds is subject to conversion, in whole, to either a daily rate, commercial paper rate, term rate or fixed rate mode, and the Bonds will be subject to mandatory tender on the date of any such conversion. Moody's rating covers Bonds while they are in the weekly and daily rate modes. Bonds in the daily rate mode will also pay interest on the first business day of each month.

Flow of Funds

The trustee is instructed to draw on the LOC by 4:00 p.m. (Eastern Time) on the business day prior to any principal or interest payment date, or upon acceleration, so as to receive funds by 2:00 p.m. (Eastern Time) on each payment date. The trustee is also instructed to draw under the LOC, in accordance with its terms, prior to 11:30 a.m. (Eastern time), on each purchase date to the extent remarketing proceeds are not available.

Bonds which are purchased by the LOC bank due to a failed remarketing are held by the trustee and will not be released until the trustee has received written confirmation from the LOC bank stating that the LOC has been reinstated in the amount of the purchase price drawn for such Bonds.

Additional Bonds

The trust indenture does not allow for the issuance of additional Bonds.

Letter of Credit

The LOC is sized for full principal plus 38 days' interest at the maximum rate of 12% on the Bonds, and will provide sufficient coverage for the Bonds while they are in the daily and weekly rate modes. The LOC shall be governed by and construed in accordance with the terms of the International Standby Practices (1998 Revision), International Chamber of Commerce Publication No. 590 (the ISP98).

Draws on the Letter of Credit

Conforming draws under the LOC for the payment of principal and interest received by the Bank by 4:00 p.m. (Eastern time) on a business day, will be honored by 10:00 a.m. (Eastern time) time on the next succeeding business day.

Conforming draws under the LOC for the payment of purchase price received by the Bank by 11:30 a.m. (Eastern time) on a business day, will be honored by 2:00 p.m. (Eastern time) on the same business day.

Reinstatement of Interest

Draws for interest on the LOC will be automatically reinstated at the opening of business on the fifth calendar day following the date such drawing is honored unless the trustee receives a notice from the LOC bank prior to the close of business on the fourth calendar day stating that the LOC will not be reinstated. Upon receipt of notice that the LOC will not be reinstated the trustee shall accelerate the Bonds and declare the Bonds immediately due and payable. Upon such acceleration the trustee shall draw on the LOC and interest shall cease to accrue upon declaration of acceleration.

Reimbursement Agreement Defaults

The LOC bank may send notice to the trustee stating that an event of default under the Reimbursement Agreement has occurred and is continuing and directing the trustee to arrange for a mandatory tender of the Bonds. Upon receipt of such notice the trustee shall arrange for such purchase to occur on a business day no later than five business days prior to the termination of the LOC. The LOC terminates 25 days following the trustee's receipt of notice of an event of default under the reimbursement agreement with direction to cause a mandatory tender of the Bonds.

Upon an event of default under the Reimbursement Agreement the LOC bank may also exercise any other remedies provided in the Indenture of Trust which include the right to direct acceleration of the Bonds. Upon receipt of such direction the trustee shall accelerate the Bonds and declare the Bonds immediately due and payable. Upon such acceleration the trustee shall draw on the LOC and interest shall cease to accrue upon declaration of acceleration.

Bond Indenture Events of Default Related to Payment

Upon a failure to pay when due the principal or interest on the Bonds, the trustee or the owners of 25% of the Bonds outstanding, with the consent of the Bank shall be entitled to declare the principal amount of the Bonds outstanding and the interest accrued thereon immediately due and payable.

Expiration/Termination of the Letter of Credit

The LOC expires on the earliest to occur of: (i) the stated expiration date, currently June 29, 2011; (ii) the earlier of (A) the date which is 15 days following the date on which the interest rate on all the Bonds convert to a rate mode other than the daily, weekly or commercial paper rate; or (B) the date on which the Bank honors a drawing under the letter of credit upon such interest rate conversion; (iii) the date on which the Bank receives notice from the trustee stating that (a) no Bonds remain outstanding; (b) all drawings under the letter of credit have been made and honored; or (c) an alternate letter of credit has been issued to replace the LOC in accordance with the terms of the Indenture of Trust; or (iv) on the 25th day following the trustee's receipt from the Bank of notice that an event of default under the Reimbursement Agreement has occurred with direction to cause a mandatory tender of the Bonds.

Substitution of the Letter of Credit

Substitution of either the LOC is permitted and requires a mandatory tender of the Bonds on the fifth business day prior to any substitution date. The LOC terminates upon cancellation by the trustee following such substitution.

Optional Tenders

While in the weekly rate mode bondholders may optionally tender their Bonds to the trustee and the remarketing agent on any business day with seven days prior notice. While in the daily rate mode bondholders may optionally tender their Bonds to the trustee and the remarketing agent on any business day with notice by 10:30 a.m. (Eastern time) on such business day. Bonds so tendered will be purchased from their owners at a price of par plus interest accrued to the purchase date.

Mandatory Tenders

The Bonds are subject to mandatory tender on: (i) on the fifth business day prior to the stated expiration date of the LOC; (ii) on the fifth business day prior to the effective date of any substitute LOC; (iii) on the fifth business day prior to termination of the LOC, including termination resulting from an event of default under the reimbursement agreement; (iv) the date on which the interest rate on the Bonds is converted to another interest rate mode; (v) on the last day of each commercial paper rate period or each term rate period.

What Could Change the Rating-Up

Long-Term: the long-term rating of the Bonds could be upgraded if the long-term deposit rating of Barclays Bank, PLC was upgraded.

Short-Term: not applicable

What Could Change the Rating-Down

Long-Term: the long-term rating of the Bonds could be downgraded if the long-term deposit rating of Barclays Bank, PLC was downgraded.

Short-Term: the short-term rating of the Bonds could be downgraded if the short-term deposit rating of the Barclays Bank, PLC was downgraded.

Key Contacts:

Underwriter: Barclays Capital

Trustee: Wells Fargo Bank, National Association

Remarketing Agent: Barclays Capital

The principal methodology used in this rating was Moody's Rating Methodology for Letter of Credit Supported Transactions published in August 2005.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings and public information

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of assigning a credit rating.

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.

Analysts

Michael J. Loughlin
Analyst
Public Finance Group
Moody's Investors Service

David A. Parsons
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS Aa3/P-1 LETTER OF CREDIT BACKED RATING TO CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY RECOVERY ZONE FACILITY REVENUE BONDS (SUNPOWER CORPORATION - HEADQUARTERS PROJECT) SERIES 2010
No Related Data.
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