Fitch Rates Colorado Springs, Colorado's $50MM VRD Utilities System Improvement Revs 2008A 'AA/F1+'

2008-09-02 23:45:02 -

- Fitch assigns a rating of 'AA/F1+' to the $50,000,000 City of Colorado Springs, Colorado (the city), variable rate demand (VRD) utilities system improvement revenue bonds, series 2008A. The proceeds of the bonds will be used to finance a number of general capital improvements to the utilities system. In addition, Fitch affirms the underlying rating of the city's $1.53 billion

parity lien utilities system revenue/refunding and system improvement revenue bonds at 'AA'. The rating outlook is Stable.

The long-term 'AA' rating on the 2008A bonds is based on the net revenue pledge of the city's combined utilities system, and reflects the system's diverse revenue stream with four major business segments (electric, natural gas, water and wastewater), competitive retail sales, consistent financial performance, relatively low-cost power supply mix, and diverse customer base.

The short-term 'F1+' rating on the 2008A bonds is based on the standby bond purchase agreement (SBPA) provided by JPMorgan Chase Bank, National Association. The SBPA provides for the payment of the principal component of purchase price and an amount equal to 35 days of interest calculated at a maximum rate of 12% per annum based on a year of 365 days during the weekly, monthly and quarterly rate modes. The SBPA will expire on Sept. 11, 2009, unless extended or earlier terminated pursuant to its terms. The 'F1+' short-term rating will expire upon the expiration or termination of the SBPA. Wells Fargo Bank, N.A., as tender agent, is required to give notice to the bank in the event that remarketing proceeds are insufficient to pay purchase price for tendered bonds. Merrill Lynch, Pierce, Fenner & Smith Incorporated is the remarketing agent for the 2008A bonds. The 2008A bonds are expected to be available for delivery on or about Sept. 12, 2008.

The 2008A bonds will be issued in the weekly rate mode, but may be converted to a monthly, quarterly, semiannual, annual, five-year, auction or fixed rate of interest. While 2008A bonds bear interest in the weekly, monthly and quarterly rate modes, interest is payable on the first business day of each month, commencing Oct.1, 2008. Holders of bonds bearing interest in a weekly, monthly or quarterly rate mode may tender their bonds for purchase with prior notice as specified in the bond ordinance. Series 2008A bonds are subject to mandatory tender upon any conversion of the interest rate modes and upon expiration, termination or substitution of the SBPA. The Series 2008A bonds are also subject to mandatory sinking fund redemption and optional redemption pursuant to the terms of the bond ordinance.

For more information on the long-term rating of the city's utility system and the series 2008B and 2008C bonds to be offered in Oct. 2008, see the press release dated Aug. 21, 2008 on the Fitch Ratings website at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, New York
Mary Jane Ziga +1-212-908-0529 (for the bonds)
Lina Santoro, +1-212-908-0522 (for the city)
Cindy Stoller, +1-212-908-0526 (Media Relations)