$34,205,000 OF DEBT AFFECTED. RATING BASED ON AN IRREVOCABLE DIRECT PAY LETTER OF CREDIT PROVIDED BY WELLS FARGO BANK, N.A.
ABAG Finance Authority for Nonprofit Corp. CA
Fully Supported
CA
Opinion
NEW YORK, Dec 1, 2010 -- Moody's Investors Service has upgraded to Aa2 from A1 (on watch for
possible downgrade) the letter of credit backed long term rating of the ABAG
Finance Authority for Nonprofit Corporations Revenue Bonds (Jewish Home of
San Francisco Project) Series 2005 (the Bonds) and confirmed the short term VMIG
1 rating in conjunction with the substitution of the current letter of credit
provided by Allied Irish Bans p.l.c. with a letter of credit provided by Wells
Fargo Bank, N.A. (the Bank). The substitution is scheduled for December 1, 2010.
RATINGS RATIONALE
The rating is based on the irrevocable direct-pay letter of credit provided the
Bank; the structure and legal protections of the transaction; and Moody's
evaluation of the creditworthiness of the Bank which ensure timely payment of
debt service and purchase price to bondholders.
Moody's currently rates the Bank Aa2 for long-term obligations and Prime-1 for
short-term obligations.
Interest Rate Modes and Payment Dates
The Bonds will continue bear interest in the daily rate mode with
interest payments made on the fifth business day of each month. The
trust indenture permits conversion, in whole or in part, of the interest rate on
the Bonds to the weekly, term, variable or auction rate modes. The Bonds will be
subject to mandatory tender upon any conversion of interest rate mode. While the
Bonds bear interest in the weekly rate mode, interest is paid on the
first business day of the month. The letter of credit will honor draws only for
Bonds bearing interest only in the daily or weekly rate modes. Moody's letter of
credit backed rating applies only while the Bonds bear interest in the daily or
weely interest rate modes.
Additional Bonds
The trust indenture permits the issuance of additional Bonds as a
separate series if authorized by a separate or supplemental indenture.
Bond funds are to be segregated by series and the trustee is instructed to draw
on the letter of credit only for the Series 2005 Bonds.
Flow of Funds
The trustee is instructed to draw on the letter of credit in accordance with its
terms in order to receive timely payment of principal and/or interest on the
Bonds on the date such payment is due, net of the amount of remarketing proceeds
on deposit.
The trustee is instructed to draw on the letter of credit in accordance with its
terms so as to have moneys sufficient for the payment of purchase price fully
available by 11:30 a.m., San Francisco Time, on the date such payment is due.
Bonds which are purchased by the Bank are registered as bank Bonds. Following
remarketing, bank bonds will not be delivered to purchasers of such Bonds until
the Tender Agent has received written confirmation that letter of credit has
been reinstated.
The Direct Pay Letter of Credit
The letter of credit is sized for full principal plus 55 days of interest at the
maximum rate applicable to the Bonds 12% and will provide coverage for the Bonds
while they bear interest at the daily or weekly interest rate modes. The letter
of credit provided by the Bank is subject to the Uniform Customs and Practice
for Documentary Credits (2007 Revision), Publication No. 600 of the
international Chamber of Commerce (the UCP).
Draws on the Letter of Credit
Conforming draws for principal and/or interest or mandatory tenders presented to
the Bank prior to 12:00 p.m., San Francisco Time, on a business day, will be
honored by the Bank by 10:00 a.m., San Francisco Time, on the on the
next business day. Conforming draws for the purchase price of Bonds tendered at
the option of bondholders presented to the Bank by 9:00 a.m., San Francisco
Time, on a business day, will be honored by the Bank by 11:00 a.m.,
San Francisco Time, on the same business day.
Reinstatement of Interest Draws
Draws made under the letter of credit for interest shall be
reinstated automatically on the sixth business day following the date any
interest drawing is honored unless the trustee receives notice that the
interest portion of the letter of credit will not be reinstated by the fifth
business day following such drawing. The Bonds will be subject to purchase no
later than the fourth business day following the trustee's receipt of such
notice.
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
cause either a mandatory tender or mandatory redemption of the Bonds. Upon
receipt of such notice with direction to tender, the trustee shall purchase the
bonds on a date no later than the ninth business day following the date of
trustee's receipt of such notice. With direction to redeem, the Bonds will be
subject to redemption no later than the 15th day following the trustee's receipt
of such notice.
Trust Indenture Events of Default Related to Payment
Upon the continuance of a failure to pay when due the principal, interest, or
purchase price on the Bonds the trustee shall, upon the written request of the
holder of not less than two-thirds (2/3) in aggregate principal amount of the
outstanding Bonds, accelerate the maturity of the Bonds and declare the
principal and accrued interest on the Bonds to be immediately due and payable.
Upon such declaration the trustee shall promptly draw on the letter of credit in
order to pay the principal and interest so declared due and payable.
Interest shall cease to accrue on the date of such declaration.
Expiration/Termination of the Letter of Credit
The letter of credit shall expire on November 17, 2015, the stated expiration
date.
Substitution
The Bonds will be subject to mandatory tender on the business day prior to the
substitution date of the letter of credit. Draws for purchase price upon the
substitution of the letter of credit will be made under the existing letter of
credit.
Optional Tenders
During the daily rate mode, bondholders may optionally tender their Bonds on any
business day by delivering notice to the trustee and remarketing agent on such
business day by 8:00 a.m., San Francisco Time.
While the Bonds bear interest at the weekly rate mode, bondholders may
optionally tender their Bonds on any business day by delivering notice to the
trustee and remarketing agent by 2:00 p.m., San Francisco Time on a business day
at least seven days prior to the purchase date.
Mandatory Tenders
The Bonds are subject to mandatory tender upon the following: (i) on the date of
a conversion of the interest rate; (ii) on the business day prior to the
termination of the letter of credit (iii) on the business day prior to the date
any substitute letter of credit is provided , (iv) on a date no later than four
business days after the trustee's receipt of notice of non-reinstatement from
the bank with direction to tender the Bonds; or (v) on a date no later than nine
business days following the trustees receipt of notice of an event of default
under the reimbursement agreement with direction to cause a mandatory tender of
the Bonds.
Mandatory Redemptions
The Bonds are subject to mandatory redemption on a date no later than 15 days
following the trustee's receipt of notice of an event of default under the
reimbursement agreement with direction to cause redemption of the Bonds.
Key Contacts:
Remarketing Agent: Wells Fargo Securities
Trustee: Wells Fargo Bank, N.A.
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 maintaining 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
Josephine Castro
Analyst
Public Finance Group
Moody's Investors Service
Michael J. Loughlin
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 UPGRADES TO Aa2 FROM A1(ON WATCH FOR POSSIBLE DOWNGRADE) THE LONG TERM LOC BACKED RATING OF THE ABAG FINANCE AUTHORITY FOR NONPROFIT CORPS REVENUE BONDS (JEWISH HOME FOR SAN FRANCISCO PROJECT) SERIES 2005; SHORT TERM VMIG 1 RATING IS CONFIRMED
