New York, April 06, 2021 -- Moody's Investors Service (Moody's) has assigned Aa3/VMIG 1 letter of
credit (LOC)-backed ratings to Iowa Finance Authority Solid Waste
Facility Revenue Bonds (Gevo NW Iowa RNG, LLC Renewable Natural
Gas Project), Series 2021 (Green Bonds) (the Bonds). The
Bonds will be supported by a direct pay LOC provided by Citibank,
N.A. (the Bank).
RATINGS RATIONALE
The ratings are based upon (i) the direct pay LOC provided by the Bank;
(ii) the structure and legal protections of the transaction, which
provide for timely payment of debt service to the bondholders; and
(iii) Moody's evaluation of the credit quality of the Bank.
Moody's current long-term and short-term Counterparty
Risk (CR) Assessments of Citibank, N.A. are Aa3(cr)
and P-1(cr), respectively.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
• Long-term: Moody's upgrades the long-term CR
Assessment of the Bank.
• Short-term: Not applicable.
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
• Long-term: Moody's downgrades the long-term
CR Assessment of the Bank.
• Short-term: Moody's downgrades the short-term
CR Assessment of the Bank.
The Bonds will be issued in an Initial Term Rate Period which shall end
on March 31, 2024. The Bonds shall be subject to mandatory
tender on the day following the end of such Initial Term Rate Period.
The interest on the Bonds will be payable on each January 1st and July
1st, commencing July 1, 2021.
The LOC is sized for the principal amount of the Bonds plus interest calculated
at the initial term rate for 203 days. The LOC provides sufficient
coverage for the Bonds in the Initial Term Rate Period only. The
trustee is instructed to draw on the LOC, in accordance with its
terms, in order to receive sufficient funds to make timely payment
of principal and/or interest on any principal and/or interest payment
date. The trustee is also instructed to draw on the LOC on each
purchase date, for the purchase price to the extent remarketing
proceeds are insufficient.
Draws for interest made under the LOC shall be automatically reinstated
by the Bank on the fifth calendar day following the honoring of such drawing
unless the trustee receives notice by such fifth day stating that an event
of default under the reimbursement agreement has occurred. The
Bonds shall be subject to mandatory tender no later than the fifteenth
(15th) day following the trustee's receipt of such notice.
The LOC will terminate following payment of the purchase price for such
mandatory tender.
Prior to the expiration, termination or substitution of the LOC,
the Bonds are subject to payment funded with a draw on the LOC.
The payment will occur upon the mandatory tender of such Bonds,
as provided below:
• Expiration: mandatory tender on the second (2nd) business
day prior to the expiration date, currently April 4, 2024,
of the LOC.
• Substitution: mandatory tender on the date of substitution
of the LOC.
• Interest rate conversion: mandatory tender on the date of
conversion of the interest rate (the interest rate of the Bonds is not
subject to conversion until the end of the Initial Term Rate Period).
• Event of default under the reimbursement agreement: Upon
an event of default under the reimbursement agreement, the Bank
may, at its option, send written notice to the trustee that
such event of default has occurred with direction to cause a mandatory
tender of the Bonds. The Bonds shall be subject to mandatory tender
no later than the fifteenth (15th) day following the trustee's receipt
of such notice. The LOC will terminate following payment of purchase
price for such mandatory tender.
The principal methodology used in these ratings was Rating Transactions
Based on the Credit Substitution Approach: Letter of Credit-backed,
Insured and Guaranteed Debts published in May 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1068154.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity
analysis, see the sections Methodology Assumptions and Sensitivity
to Assumptions in the disclosure form. Moody's Rating Symbols and
Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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 certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain 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.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
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.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Michael J. Loughlin
Vice President - Senior Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Joann Hempel
VP - Senior Credit Officer
Public Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
