TEXT-Fitch affirms Indiana Finance Authority
Aug 3 - Fitch Ratings affirms the 'F1+' rating on the following Indiana Finance Authority (IFA) bonds: --$37.31 million lease appropriation bonds (Stadium Project), series 2008A; --$60 million lease appropriation bonds (Convention Center Expansion Project), series 2008A-2. SECURITY Commitment of the authority, contained in supplemental indentures, to purchase bonds bearing interest at a daily or weekly rate that are tendered for purchase for which remarketing proceeds are insufficient. KEY RATING DRIVERS --AMPLE LIQUIDITY: Funds designated by the IFA for self-liquidity, the spending of which is entirely at the discretion of the IFA, provide ample liquidity to meet tenders on variable-rate debt that has not been remarketed. The IFA's stated intent is to maintain balances in the funds at about 2x the amount of its commitment, and current coverage is higher. --ADEQUATE TIMING MECHANISMS: Timing mechanisms detailed in supplemental indentures allow for timely payment in the event of a failed remarketing. CREDIT PROFILE The IFA provides self-liquidity for a portion of the variable-rate debt associated with its stadium and convention center financings. The authority began this program in 2009, in an effort to diversify its liquidity providers. No further use of self-liquidity is contemplated. The supplemental indentures for the stadium and convention center projects provide for the payment of the purchase price by the authority of tendered 2008A stadium bonds and 2008A-2 convention center bonds during the daily and weekly rate modes in the event the proceeds of a remarketing of the bonds following a tender are insufficient. The commitments are sized to provide for the entire principal amount of the respective series plus interest coverage of 37 days calculated at a maximum interest rate of 12%. The short-term 'F1+' ratings will expire on Feb. 1, 2035 for the series 2008A stadium bonds and Feb. 1, 2039 for the subseries 2008A-2 convention center bonds; the term of these commitments matches the scheduled maturity date of the bonds. The bonds currently bear interest at a weekly rate. The IFA was created in 2005, consolidating the debt-issuing entities of the state. The stadium and convention center bonds funded a large project that included construction of a new stadium in downtown Indianapolis where the Indianapolis Colts National Football League franchise plays and an associated convention center expansion. Ultimately, the security for the bonds (and the 'AA+' long-term rating) rests with biennial state lease appropriations of rental payments that commenced upon project completion, although the state expects that earmarked tax revenues will be sufficient to pay debt service and general fund revenues will not be necessary.