TEXT-Fitch rates Va. Public School Authority financing bonds 'AA+'

Tue Dec 4, 2012 3:28pm EST

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Dec 4 - Fitch Ratings assigns an 'AA+' rating to the following Virginia
Public School Authority (VPSA) bonds:

--$62,750,000 school financing bonds (1997 resolution) series 2012 D.

The bonds are expected to sell through negotiation on or about Dec. 11, 2012.
The bonds are being issued for refunding purposes for debt service savings.

In addition, Fitch affirms the 'AA+' ratings on outstanding VPSA school
financing bonds and school education technology notes.

The Rating Outlook is Stable.

SECURITY

VPSA school financing bonds are secured by general obligation (GO) bond payments
from participating localities that are pledged by the authority to the bonds. A
sum-sufficient appropriation for any shortfalls in debt service that is
available from the commonwealth's literary and general funds enhances credit
quality and provides the basis for the rating.

KEY RATING DRIVERS

COMMONWEALTH APPROPRIATION OBLIGATION: The 'AA+' rating, one notch below the
commonwealth's GO rating, is based on the availability of a sum-sufficient
appropriation for debt service deficiencies from the commonwealth's literary
fund and, if necessary, the general fund.

'AAA' COMMONWEALTH GO RATING: The commonwealth's GO bonds are rated 'AAA' by
Fitch, reflecting Virginia's substantial economic resources, conservative
approach to financial operations, and lower-moderate debt burden.

SUM-SUFFICIENT APPROPRIATION REQUIRED TO BE SOUGHT ANNUALLY: Statute requires
that the governor request the sum-sufficient appropriation biennially, with such
appropriation subject to General Assembly approval.

STATE AID INTERCEPT AVAILABILITY: A tested state aid intercept mechanism,
intended to be tapped first in the event of a local school bond payment default,
exists to cure any local loan deficiencies.

LOCAL LOANS ARE GOs OF BORROWERS: All local loans made under the program
represent general obligations of the borrowing units, and none have defaulted in
VPSA's history.

CREDIT PROFILE

The series 2012 D bonds are being issued pursuant to the 1997 resolution, which
includes a 'sum sufficient' appropriation from available moneys of Virginia's
literary fund and, if those are not adequate, the general fund. The
appropriation, which the governor must request from the General Assembly
pursuant to statute, bolsters the local government loan repayments that are the
primary source of security. Additional strength derives from state law providing
for the withholding of state payments to local governments in the event of a
local loan payment default, along with Virginia's commitment to education.

Bond proceeds are used to acquire GO school bonds of local borrowers. Local
payments of principal and interest to be made on the local school GO bonds are
used to pay debt service on the authority's school financing bonds. No local
government has defaulted in VPSA's history, but in the event of a default, state
law requires the intercept of state payments due to the local unit until the
default is cured. Local payments are due approximately 15 days in advance of
bond payments, allowing time for implementation of the intercept. Finally, if
required, the sum sufficient appropriation would be used.

The commonwealth's 'AAA' GO bond rating reflects its substantial economic
resources, conservative approach to financial operations, and lower-moderate
debt levels. For more information on the commonwealth's GO rating, please see
the Fitch release titled 'Fitch Rates VA Public School Auth School Tax Credit
Bonds 'AA+'; Affirms VA GOs at 'AAA' dated Oct. 4, 2012 and available at
'www.fitchratings.com'.


Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 14, 2012);
--'U.S. State Government Tax-Supported Rating Criteria' (Aug. 14, 2012).

Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria
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