Fitch Rates Toledo-Lucas County Port Authority (Ohio) Bond Fund Revs 'BBB+'; Outlook Stable

2008-05-05 23:44:01 -

- Fitch Ratings assigns 'BBB+' ratings to the Toledo-Lucas County Port Authority, OH (the authority) Northwest Ohio Bond Fund (the bond fund), $4,845,000 taxable development revenue bonds, series 2008A (Port Authority Facilities). The bonds will be offered during the week of May 5. In addition, Fitch affirms the 'BBB+' rating on the bond fund's outstanding $90.2 million of revenue bonds. The Rating Outlook is Stable.

The authority established the bond fund in 1988 to advance economic development efforts in the region. Currently, the bond fund has 26 participants, with outstanding bonds totaling $90.2 million. The authority remains the program's largest obligor representing 15.8% of the total portfolio, after this issuance.

All of the bond fund bonds are secured by lease or loan payments by the pool participants, as well as funds held in reserves, which equal $29.1 million or 30.6% of the principal of all outstanding bonds. The bond fund reserves comprise: primary reserves funded by each borrower equal to approximately 10% of bond principal and additional reserves specific to certain series of bonds; and program reserves, which include a $6.5 million cash contribution from the authority and a $10 million irrevocable letter of credit from Fifth Third Bank that expires Nov. 15, 2016, subject to extension. Shortfalls in bond payments due to loan or lease defaults must be made up first from the defaulting borrowers' primary reserves, then from program reserves, and finally from any remaining primary reserves.

The 2008A bond proceeds will pay the costs of acquiring approximately 182 acres of land located adjacent to the authority's existing dock and wharf facilities in the city of Toledo, finance capitalized interest on the bonds, fund the primary reserve, and pay a portion of costs of issuance.

The bonds are secured by legally available revenue of the authority. The authority anticipates that the revenue for the 2008A bonds will be derived from lease payments from Midwest Terminals of Toledo (Midwest), a cargo shipping company, which will lease and improve the site. The lease payments from Midwest are not pledged to the bonds, but are expected to be equal to debt service on the bonds plus fees and expenses.

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