Approximately $19 billion of outstanding debt affected
New York, June 22, 2012 -- Moody's Investors Service has downgraded ratings of the below listed gas
prepayment bonds. The bonds were placed under review for downgrade
on February 17, 2012. The downgrades are due to the downgrades
of Citigroup, Inc., Goldman Sachs Group, Inc.,
Credit Agricole Corporate & Investment Bank, JPMorgan Chase
& Co., Merrill Lynch & Co., Morgan Stanley,
BNP Paribas, Royal Bank of Canada and Societe Generale which occurred
on June 21, 2012. These entities support certain payment
obligations of the bonds. Please use the following link to access
Moody's announcement of these downgrades of banks and securities
firms with global capital markets operations:
http://www.moodys.com/research/Moodys-downgrades-firms-with-global-capital-markets-operations--PR_248989
A list of affected gas prepayment bonds and how each of them is affected
by the downgrades described in this announcement is provided below.
Affected Gas Pre-Payment Bonds
(1) Public Energy Authority of Kentucky, Inc. Variable Rate
Gas Supply Revenue Bonds, Series 2006A
Moody's has downgraded the long-term and short-term
ratings of issue (1) to Baa2/ SG from Baa1/VMIG 3. The long-term
rating of the bonds is based upon the credit quality of: (i) BP
Corporation North America, Inc. (Baa1) as gas supplier;
(ii) Societe Generale (A2) as interest rate swap provider; and (iii)
Citigroup Inc. (Baa2/ P-2) as guaranteed investment agreement
provider.
The short-term rating of the bonds is based upon the credit quality
of BP Corporation North America Inc. as provider of the standby
bond purchase agreement (SBPA) and the likelihood of termination of the
SBPA. The SBPA automatically terminates upon (i) bankruptcy of
BP Corporation North America, Inc. and (ii) nonpayment of
principal, interest, redemption price or purchase price of
the bonds.
(2) Tennessee Energy Acquisition Corporation Gas Project Revenue Bonds,
Series 2006A
Moody's has downgraded the rating of issue (2) to Baa2 from A2.
This rating is based upon the credit quality of: (i) Goldman Sachs
Group, Inc. (A3) as gas supplier guarantor; (ii) Royal
Bank of Canada (Aa3) as commodity swap provider; and (iii) Citigroup
Inc. (Baa2/ P-2) as guaranteed investment agreement provider.
(3) American Municipal Power, Inc., OH Electricity
Purchase Revenue Bonds, 2007A
Moody's has downgraded issue (3) to Baa2 from A2. The long-term
rating on the bonds is based upon the credit quality of: (i) Goldman
Sachs Group, Inc. (A3) as electric supplier guarantor;
(ii) AMP Ohio (A1) as the participant; and (iii) Citigroup Inc.
(Baa2/ P-2) as guaranteed investment agreement provider.
(4) Salt Verde Financial Corporation, AZ Senior Gas Revenue Bonds,
2007
Moody's has downgraded issue (4) to Baa2 from A3. This rating
is based upon the credit quality of: (i) Citigroup, Inc.
(Baa2) as gas supplier guarantor; (ii) Royal Bank of Canada (Aa3)
as commodity swap provider; (iii) the Salt River Project Agricultural
Improvement & Power District, AZ (Aa1) as the sole participant;
and (iv) American General Life Insurance Company (A2) as guaranteed investment
agreement provider.
(5) New Mexico Municipal Energy Acquisition Authority Gas Supply Variable
Rate Revenue Bonds, Series 2009
(6) Lancaster Port Authority Gas Supply Variable Rate Revenue Bonds,
Series 2008
(7) Main Street Natural Gas, Inc. Gas Project Variable Rate
Revenue Bonds, Series 2010
(8) Central Plains Energy Project Gas Project Variable Rate Revenue Bonds
(Project No. 2), Series 2009
(9) California Statewide Communities Development Authority Gas Supply
Revenue Bonds, Series 2010
Moody's has downgraded the long-term ratings of issues (5)
-- (9) listed above to Aa3 from Aa1. The VMIG 1 short-term
ratings are not affected. The long-term ratings on these
issues are based upon the credit quality of Royal Bank of Canada (Aa3)
as (i) the supplier under the gas purchase agreement and (ii) the interest
rate swap provider.
(10) Texas Municipal Gas Acquisition & Supply Corporation II Gas Supply
Revenue Bonds, Series 2007A & 2007B
(11) Indiana Bond Bank Gas Revenue Bonds, 2007
(12) Municipal Energy Acquisition Corp. Gas Revenue Bonds,
Series 2006A & 2006B
Moody's has downgraded the long-term ratings of issues (10)
-- (12) listed above to A2 from Aa3. These ratings are based
upon the credit quality of (i) JPMorgan Chase & Co. (A2) as
gas supplier guarantor; (ii) BNP Paribas (A2) as commodity swap provider;
(iii) JPMorgan Chase Bank, N.A. (Aa3) as interest
rate swap provider; and (iv) Transamerica Life Insurance Company
(A1/ P-1) as guaranteed investment agreement provider.
(13) Main Street Natural Gas, Inc. Gas Project Revenue Bonds,
Series 2006A
Moody's has downgraded the rating of issue (13) to A2 from Aa3.
This rating is based upon the credit quality of (i) JPMorgan Chase &
Co. (A2) as gas supplier guarantor; (ii) Credit Agricole Corporate
& Investment Bank (A2) as commodity swap provider; (iii) Assured
Guaranty Municipal Corp. (Aa3 under review for downgrade) as surety bond provider; and
(iv) Credit Agricole Corporate & Investment Bank (A2) as guaranteed
investment agreement provider.
(14) Northern California Gas Authority No. 1 Gas Project Revenue
Bonds, Series 2007A & 2007B
Moody's has downgraded the rating of issue (14) to Baa1 from A2.
This rating is based upon the credit quality of (i) Morgan Stanley (Baa1)
as gas supplier guarantor; (ii) Royal Bank of Canada (Aa3) as commodity
swap provider; (iii) Morgan Stanley (Baa1) as interest rate swap
provider; (iv) Sacramento Municipal Utility District (A1) as participant;
and (v) Morgan Stanley (Baa1) as guaranteed investment agreement provider.
(15) Roseville Natural Gas Financing Authority, CA Gas Prepayment
Revenue Bonds, Series 2007A
Moody's has downgraded the rating of issue (15) to Baa2 from Baa1.
This rating is based upon the credit quality of (i) Merrill Lynch &
Co. (Baa2) as gas supplier guarantor; (ii) JPMorgan Chase
Bank, N.A. (Aa3) as commodity swap provider;
(iii) Assured Guaranty Municipal Corp. (Aa3 under review for downgrade) as surety bond provider;
and (iv) Wells Fargo Bank, N.A. (Aa3) as guaranteed
investment agreement provider.
(16) Main Street Natural Gas, Inc. Gas Project Revenue Bonds,
Series 2006B
Moody's has downgraded the rating of issue (16) to Baa2 from Baa1.
This rating is based upon the credit quality of (i) Merrill Lynch &
Co. (Baa2) as gas supplier guarantor; (ii) UBS AG (A2) as
commodity swap provider; (iii) Assured Guaranty Municipal Corp.
(Aa3 under review for downgrade) as surety bond provider; and (iv) Credit Agricole Corporate
& Investment Bank (A2) as guaranteed investment agreement provider.
(17) Main Street Natural Gas, Inc. Gas Project Revenue Bonds,
Series 2007A
Moody's has downgraded the rating of issue (17) to Baa2 from Baa1.
This rating is based upon the credit quality of (i) Merrill Lynch &
Co. (Baa2) as gas supplier guarantor; (ii) Credit Agricole
Corporate & Investment Bank (A2) as commodity swap provider;
(iii) the Municipal Gas Authority of Georgia (A1) as participant;
and (iv) Transamerica Life Insurance Company (A1/ P-1) as guaranteed
investment agreement provider.
(18) Public Authority for Colorado Energy Natural Gas Purchase Revenue
Bonds, Series 2008
Moody's has downgraded the rating of issue (18) to Baa2 from Baa1.
This rating is based upon the credit quality of (i) Merrill Lynch &
Co. (Baa2) as gas supplier guarantor; (ii) Royal Bank of Canada
(Aa3) as commodity swap provider; (iii) the City of Colorado Springs
(Aa2) as participant; (iv) Transamerica Life Insurance Company (A1/
P-1) as guaranteed investment agreement provider; and (v)
Credit Agricole Corporate & Investment Bank (A2) as guaranteed investment
agreement provider.
(19) Natural Gas Acquisition Corporation of the City of Clarksville,
TN Gas Revenue Bonds, Series 2006
Moody's has downgraded the rating of issue (19) to Baa2 from Baa1.
This rating is based upon the credit quality of (i) Merrill Lynch &
Co. (Baa2) as gas supplier guarantor; and (ii) Wells Fargo
Bank, N.A. (Aa3/ P-1) as guaranteed investment
agreement provider. Moody's rating also takes into consideration
(i) the Aa3 underlying rating of the City of Clarksville, TN combined
utility system and (ii) an internal assessment of the likelihood of the
Humphreys County Utility District failing to make payment.
(20) Long Beach Bond Finance Authority Natural Gas Purchase Revenue Bonds,
Series 2007A & 2007B
Moody's has downgraded the rating of issue (20) to Baa2 from Baa1.
This rating is based upon the credit quality of (i) Merrill Lynch &
Co. (Baa2) as gas supplier guarantor; (ii) Royal Bank of Canada
(Aa3) as commodity swap provider; (iii) the City of Long Beach Gas
Utility (A1) as participant; (iv) Merrill Lynch & Co.(Baa2)
as interest rate swap provider; and (v) American General Life Insurance
of Delaware (A2) as guaranteed investment agreement provider.
(21) Texas Municipal Gas Acquisition & Supply Corporation I,
Gas Supply Revenue Bonds, Series 2006A & 2006B
(22) Texas Municipal Gas Acquisition & Supply Corporation I,
Gas Supply Revenue Bonds, Series 2008D
Moody's has downgraded the ratings of issues (21) -- (22) listed
above to Baa2 from Baa1. These ratings are based upon the credit
quality of Merrill Lynch & Co. (Baa2) as (i) gas supplier guarantor;
and (ii) interest rate swap provider for Series 2006B and Series 2008D.
(23) Central Plains Energy Project Gas Project Revenue Bonds (Project
No. 3), Series 2012
Moody's has downgraded the rating of issue (23) to A3 from A1.
This rating is based upon the credit quality of: (i) Goldman Sachs
Group, Inc. (A3) as gas supplier guarantor; (ii) Municipal
Utilities District of Omaha (Aa2) as participant; and (iii) Natixis
(A2) as guaranteed investment agreement provider.
(24) Black Belt Energy Gas District Gas Project Revenue Bonds, Series
2012A
Moody's has downgraded the rating of issue (24) to A3 from A1.
This rating is based upon the credit quality of: (i) Goldman Sachs
Group, Inc. (A3) as gas supplier guarantor; (ii) The
Municipal Gas Authority of Georgia (A1) as participant; and (iii)
Clarke-Mobile Counties Gas District (A1) as participant.
The principal methodology used in these ratings was Gas Prepayment Bonds
published in December 2008. Please see the Credit Policy page on
www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
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Joann Hempel
VP - Senior Credit Officer
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
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Thomas Jacobs
VP - Senior Credit Officer
Public Finance Group
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