November 11, 2008
Fitch Rates Georgia Municipal Gas Authority $120MM Gas Revs ‘F1+’
Fitch Ratings assigns an 'F1+' rating to Georgia Municipal Gas Authority's (Gas Authority) planned issuance of $120 million gas revenue bonds (Portfolio III Project), series 2008C. In addition, Fitch affirms the Gas Authority's outstanding $110 million of gas revenue bonds at 'A+'. The Rating Outlook is Stable. The 2008C notes are scheduled to price the week of Nov. 24, 2008.
The bonds are direct and general obligations of the Gas Authority (Fitch long-term rating of 'A+') and are secured by the pledge of the Gas Authority's members on parity with the Gas Authority's other outstanding Portfolio III obligations. The bonds will mature in 13-15 months, and management anticipates refinancing these notes at that point to long term obligations.
The 'F1+' rating reflects the credit quality of the Gas Authority's diverse membership, favorable court validated take-or-pay contracts, diverse gas supply, adequate liquidity and experienced management team that has delivered consistent discounts to its members. Credit concerns include the overall lower wealth indicators of several members and concentration of industrial customers (58% of total throughput).
The Gas Authority is a joint action agency set up to manage wholesale gas supply for its 76 members and 10 partial requirement partners. Bond proceeds will be used to provide funds to Public Gas Partners (PGP) to refinance outstanding lines of credit used to acquire and develop natural gas reserves. The Gas Authority's interests in the PGP reserves constitute a portion of the Gas Authority's Portfolio III supply mix. All Gas Authority members participate in Portfolio III and are required to pay for all costs including unlimited step ups.
For more information on the characteristics of the Gas Authority and PGP, please see the Fitch Ratings press releases dated Sept. 24, 2008 and Nov. 7, 2008, respectively.