TEXT-Fitch affirms Pennsylvania Infrastructure 2005A rev at 'AAA'
Dec 5 - Fitch Ratings affirms its 'AAA' rating on the following Pennsylvania Infrastructure Investment Authority (Pennvest) bonds: --$3.9 million outstanding loan pool program revenue bonds (1990 indenture) The Rating Outlook is Stable. SECURITY The bonds are secured by loan repayments payable from local government entities, reserves, and investment earnings. KEY RATING DRIVERS STRONG FINANCIAL STRUCTURE: Fitch's cash flow modeling demonstrates that Pennvest's revolving fund program can continue to pay bond debt service even with portfolio loan defaults of 100.0% (the default tolerance rate) through final maturity in 2014. This is in excess of Fitch's 'AAA' liability default hurdle of 40.9% as produced using Fitch's Portfolio Stress Calculator (PSC), which is derived based on overall pool credit quality as measured by the rating of underlying borrowers, size, loan term, and concentration. SOLID PROGRAM MANAGEMENT: Pennvest maintains formal monthly loan monitoring procedures. While there are no delinquent or defaulted borrowers in the pledged portfolio, Pennvest has experienced certain loan defaults and delinquencies in its direct loan pool, which are not pledged to bond holders. STRONG LOAN SECURITY: The underlying loan security is strong with all loans backed by the borrowers' general obligation or utility system pledges, or a combination of both. CREDIT PROFILE Established in 1988, Pennvest provides loans and grants to Pennsylvania localities and some private entities for drinking water, wastewater, stormwater, and nonpoint source pollution control system improvements. Pennvest has no plans to issue additional bonds to fund loans under the 1990 bond indenture. OVERCOLLATERALIZATION AND RESERVES SIGNIFICANTLY ENHANCE BONDS All pledged loan repayments are projected to provide minimum annual debt service coverage of 4.7 times (x) until final bond maturity in 2014. The program also maintains a debt service reserve fund totaling approximately $2 million, which is currently invested in a collateralized repurchase agreement. The program can withstand 100% loan defaults even if the available reserve fund is not applied. PORTFOLIO CHARACTERISTICS The pledged loan pool of 82 borrowers is concentrated with the largest ten borrowers accounting for approximately 74% of the total portfolio. The entire loan principal is secured by general obligation, utility system, or combination pledges. The loan portfolio is well seasoned as it was funded from Pennvest bond proceeds and commonwealth contributions from 1988 to 1994. 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