Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Enter the above code here:
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S REVISES OUTLOOK ON MIAMI-DADE COUNTY TRANSIT SYSTEM SALES SURTAX BONDS TO NEGATIVE FROM STABLE AND ASSIGNS MIG 1 RATING $100 MILLION BOND ANTICIPATION NOTES SERIES 2011

Global Credit Research - 30 Aug 2011

Aa3 RATING AFFIRMED ON APPROXIMATELY $973 MILLION OUTSTANDING SALES SURTAX REVENUE BONDS

Miami-Dade (County of) FL
Municipality
FL

Moody's Rating

ISSUE

RATING

Transit System Bond Anticipation Notes, Series 2011

MIG 1

  Sale Amount

$100,000,000

  Expected Sale Date

09/12/11

  Rating Description

Bond Anticipation Notes

 

Opinion

NEW YORK, Aug 30, 2011 -- Moody's Investors Service has assigned a MIG 1 rating to the Miami-Dade County Transit System's (MDT) $100 million Bond Anticipation Notes (BANs), Series 2011 issued by Miami-Dade County. Additionally, Moody's has affirmed the Aa3 rating on the county's approximately $973 million of outstanding sales surtax revenue Bonds. The outlook is revised to negative from stable. Note principal is payable from the proceeds of the future sale of long term bonds which have already been authorized.

SUMMARY RATING RATIONALE

The MIG 1 rating incorporates the Aa3 long term rating on the sales surtax revenue bonds and the existing authorization of long term bonds to refinance the BANs on or before note maturity on November 1, 2012. MDT's outstanding long-term bonds are secured by a gross senior lien pledge of 80% of Miami-Dade County's one-half cent public transportation sales tax. Interest on the note constitutes a subordinate lien obligation on the sales tax revenues that secure the MDT's revenue bonds. The Aa3 long term rating reflects the strength of the gross sales tax pledge, recent improving collection trends, and legal covenants including an additional bonds test (ABT) of 1.5 times. However, debt service coverage levels have declined recently with increased issuance and reduced sales tax receipts that were hurt by the recession. The negative outlook reflects Moody's expectation that debt service coverage will continue to decline given MDT's capital needs and planned debt issuance to address its substantial fixed costs and fund a large capital plan. The negative outlook also incorporates the transit system's narrow operations that rely on surplus sales tax revenues after debt service, and recent problems that resulted in a suspension of MDT's Federal Transit Administration (FTA) grants. Following corrective measures, a portion of the federal funds have been restored and the remainder is expected in the fall.

The BANs will be privately placed with Citibank, with a closing expected in mid-September. Proceeds will be used to provide interim funding for improvements to MDT transit and public works projects.

CREDIT STRENGTHS

* Satisfactory debt service coverage generated by sizable economic base

* County commitment to increase its general fund subsidy to operate the transit system by 3.5% annually

* Oversight of "People's Transportation Plan" projects by a quasi-independent board, the Citizens' Independent Transportation Trust (CITT)

CREDIT CHALLENGES

* Sales tax performance weakened by recession

* Debt service coverage expected to decline as sales tax is leveraged with sizeable planned bond issuance

* Heavy reliance on the county's general fund to provide funding for transit operations and need for additional operating funds in 2014

* Large capital program relies on significant future borrowing and would require additional revenues to fully implement

* Somewhat weak additional bonds test (1.5 times maximum annual debt service) for transit sector

DETAILED CREDIT DISCUSSION

DEDICATED SALES TAXES SECURE BONDS; SATISFACTORY LEGAL COVENANTS

The bonds are secured by a gross pledge of 80 percent of the receipts attributable to a one-half cent county-wide sales tax, approved by voters. Gross sales taxes are collected by the state department of revenue and then deposited monthly, net of a 3% administrative charge, into the transit system sales surtax trust fund held by the county finance director. After satisfying debt service requirements, including the revenue bonds as well as other special obligations of the county issued for transit purposes, remaining sales tax receipts are used to support MDT's operating costs.

The additional bonds test is satisfactory at 1.5 times maximum annual debt service (MADS) for senior lien debt, based on pledged revenues for twelve consecutive months in the preceding eighteen consecutive months, and 1.25 times for senior and subordinate debt combined. The debt service reserve fund requirement is equal to MADS or such lesser amount which is the greatest allowable under the federal tax code. The reserve is currently funded at MADS, approximately $60.7 million net of federal Build America Bond subsidies for prior issuances, with $43.2 million in cash and $17.4 million in a surety with FSA.

The Build America Bond subsidy is pledged to the MDT's Series 2009B and 2010B bonds and, per an indenture amendment last year, is subtracted from MDT's calculation of debt service, weakening the additional bonds test. This exposes the county to additional payments should the federal subsidy not be received. However, the county has built a six-month lag into the cash flows to guard against delayed receipt of the federal subsidy.

DEBT SERVICE COVERAGE PROJECTED TO DECLINE FOLLOWING INCREASED ISSUANCE

In fiscal 2008, pledged revenues covered sales surtax bonds MADS by a strong 5.06 times. However, as sales tax receipts declined during the recession and debt service costs increased with additional bond issuance, MADS coverage dropped in half to 2.49 times in fiscal 2009. With the planned issuance of approximately $500 million next year to refinance the BANs and provide needed capital funds, MADS costs are estimated to increase to $101.3 million, before the federal subsidy. Based on Moody's calculation of debt service coverage, with the federal subsidy added to revenues rather than subtracted from debt service, MADS coverage would decline to 1.63 times in fiscal 2012, based on a forecast of 4.5% sales tax growth in fiscal 2012, following estimated 5.3% growth in fiscal 2011. While debt service coverage remains satisfactory, absent new revenues the current rating level may be unsustainable if the county continues to aggressively issue new surtax-backed debt.

MDT has no variable rate debt or swaps although it does have exposure to ten lease in-lease out (LILO) agreements. The county is negotiating with the investor to resolve four of the agreements that are in technical default due to the downgrade of guaranteed investment contracts (GICs). A total of $38 million could be required if MDT has to fully collateralize the transactions.

OPERATIONS HEAVILY SUBSIDIZED BY THE COUNTY'S GENERAL FUND

MDT is the 14th largest transit system in the nation and the largest in Florida, providing bus, rail, an automated guide-way system in downtown Miami (Metromover) and para-transit service. In common with most transit systems across the country, MDT's ridership has been negatively affected by the economic recession. Ridership declined by 9% in fiscal 2009 and 5.8% in 2010 after moderate annual increases of 5.3%, 1.7%, and 3.2% in fiscal years 2006, 2007, and 2008, respectively.

MDT is owned and operated by Miami-Dade County (G.O. bonds rated Aa2 with a negative outlook). The system relies heavily on transfers from the county's general fund to support operations. These transfers account for approximately one-third of the system's operating revenues. The county has committed to increasing its "maintenance of effort" contribution by 3.5% annually. The county also transfers a portion of its Local Option Gas Tax revenues, which amounted to $17.2 million in fiscal 2010, and state subsidies totaled $27.6 million in fiscal 2010. A fare increase of 50 cents was imposed in 2009 and the county has approved future increases based on increases in the CPI every three years. However fares cover a relatively low percentage (about 20%) of total operating expenses, before depreciation.

Last year, the Federal Transit Administration (FTA) suspended about $180 million in grants to MDT following allegations of material weakness in its financial controls. Corrective actions have been identified and taken or are in progress. As of July 1, 2011, approximately $63 million in 2010 grants have been restored along with $17 million in federal stimulus funds that were also withheld. MDT is still waiting to receive about $103 million in 2011 grants and expects those funds later in the fall. The suspension of the federal funds had no impact on the flow of sales tax revenues to debt service or operations, and no operating cuts or service reductions were necessary as a result of the action. However, the suspension did reveal the need for the Miami-Dade County's transit department to improve its financial procedures and delayed the receipt of an important resource for the transit system.

SALES TAX RESULTS IMPROVE BUT REMAIN BELOW PRE-RECESSION PEAK

Pledged sales tax revenues increased 2.3% in fiscal 2010, after declines of 2.5% and 7.4% in fiscal years 2008 and 2009. Sales tax transfers to MDT peaked at $153 million in fiscal 2007. Pledged revenues include the sales tax on transactions up to $5,000, which would exclude most car sales. As a result, MDT's sales tax trends have been less volatile than other systems supported by sales taxes that include higher priced items negatively affected by the recession.

Fiscal 2010 results came in higher than expected and the most recent estimate for fiscal 2011 indicates 5.3% growth in fiscal 2011. Year-over-year results through May 2011 are 7.3% higher than last year. MDT projects sales tax revenue growth of 4.5% per year, but sales tax performance would likely be negatively affected if the economic recovery is delayed or is weaker than expected.

COUNTY-WIDE SALES TAX SUPPORTED BY SIZABLE AND DIVERSE ECONOMIC BASE

The pledged sales tax, approved by voters in November 2002 by a margin of two to one, is a county-wide one-half cent sales and use tax on all transactions up to $5,000. Collection of the tax began in January 2003. Total revenues are net of an up to 3% state collection fee and pledged revenues are net of a 20% distribution to cities in the county with transit projects.

The county's sizeable economic base is an important southeast center with established international ties and a broad-based economy fueled by tourism and international trade. While long-term expansion should be supported by the county's diversified base of tourism, trade, banking, and manufacturing industries, the local economy contracted during the recession. Unemployment remains high at 13.7% in May 2011, above the state (10.5%) and the nation (8.7%), both of which declined over the past year while the county's rate climbed.

Tourism, the county's primary economic component, was hurt by both domestic and international travel. International trade has taken on an increasingly important role in the economy, fueled by the county's airport and seaport operations. The county's real estate market, which had been bolstered by low interest rates and international investment, experienced a material slowdown underscored by a steep decline in building permits, high foreclosure rates, and a falloff in construction activity. However, there are signs of economic stabilization. According to Moody's Economy.com (July 2011), recovery of the Miami economy is gathering momentum with expansion of the service sector and growth in both single and multi-family housing permits. Long term, Miami's economy is expected to outperform the nation due to its growing infrastructure, strong international trade ties, and stature as an attractive international tourism destination.

SIZEBABLE CAPITAL PROGRAM FOR NEW PROJECTS AND SERVICE IMPROVEMENTS

MDT's sales surtax bonds provide funds for projects under the "People's Transportation Plan" (PTP) overseen by a quasi-independent board, the Citizens' Independent Transportation Trust (CITT). The PTP includes new capital projects and service improvements to both transit and roadway infrastructure. Transit projects include bus and rail facility improvements, fare collection system replacements, vehicle rehabilitation and replacements, and improvements to the rapid transit corridor. Public Works projects include major roadway as well as neighborhood improvements. Funding for the capital plan to date totals $1 billion. Additional financing through 2016 totals a substantial $1.48 billion. The MDT has demonstrated its ability to successfully complete projects ahead of schedule and on budget.

Outlook

The negative outlook reflects Moody's expectation that debt service coverage will decline as the transit system continues debt issuance plans to support its capital program. The outlook also incorporates the transit system's narrow operations and the suspension of MDT's FTA grants due to weak financial controls.

What would change the rating - UP

* Higher-than-expected debt service coverage, despite MDT's significant borrowing plans

* Voter approval of an additional sales tax to better support transit operations and lessen MDT's reliance on transfers from the county's general fund

What would change the rating - DOWN

* Lower debt service coverage resulting from a continued economic downturn or continued aggressive issuance of new debt, absent new revenues

* Diminished ability of the county's general fund to provide support for the transit enterprise as a result of budgetary pressures

* Downgrade of Miami-Dade County's rating

KEY STATISTICS

Miami-Dade Transit:

Change in pledged sales taxes, fiscal 2009: -7.4%

Change in sales taxes, fiscal 2010: 2.3%

Projected coverage of current MADS by estimated fiscal 2011 pledged revenues: 2.25x (Moody's calculation)

Projected coverage of MADS (including 2012 planned issuance) by estimated fiscal 2011 pledged revenues: 1.56x (Moody's calculation)

Total passengers transported, 2010: 97.5 million

Change in ridership, 2010: -5.8%

Miami-Dade County:

Estimated population, 2010: 2.56 million

Unemployment rate, 5/11: 13.7% (vs. 10.5% State)

RATING METHODOLOGY

The current rating assignment on the Miami-Dade County Transit System Bond Anticipation Notes and Sales Surtax Revenue Bonds was assigned by evaluating factors we believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the issuer versus others within its industry or sector, ii) the capital structure and financial risk of the issuer, iii) the projected performance of the issuer over the near to intermediate term, iv) the issuer's history of achieving consistent operating performance and meeting budget or financial plan goals, v) the debt service coverage provided by such revenue stream, vi) the legal structure that documents the revenue stream and the source of payment, and vii) the issuer's management and governance structure related to the payment. These attributes were compared against other issuers both within and outside of the Miami-Dade County Transit Enterprie's core peer group and the Miami-Dade County Transit System Bond Anticipation Notes and Sales Surtax Revenue bond ratings are believed to be comparable to ratings assigned to other issuers of similar credit risk.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant 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 relevant 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 relevant 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.

Information sources used to prepare the rating are the following: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a 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 Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's 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 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.

Analysts

Nicole Johnson
Analyst
Public Finance Group
Moody's Investors Service

Baye B. Larsen
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

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


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

MOODY'S REVISES OUTLOOK ON MIAMI-DADE COUNTY TRANSIT SYSTEM SALES SURTAX BONDS TO NEGATIVE FROM STABLE AND ASSIGNS MIG 1 RATING $100 MILLION BOND ANTICIPATION NOTES SERIES 2011
No Related Data.

 

© 2014 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. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATION") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S 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. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S 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. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S 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 AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS FOR RETAIL INVESTORS TO CONSIDER MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS IN MAKING ANY 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.

 


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 the Moody’s 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 SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

 


MIS, 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 MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS 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 "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

 


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 clients. It would be dangerous for "retail clients" to make any investment decision based on MOODY'S credit rating. If in doubt you should contact your financial or other professional adviser.

© 2014 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
Regional Sites: