Fitch to Confirm 'F1+' S-T Rating on Colorado Springs, CO VRD Utilities System Revs Ser 2005A

NEW YORK--(BUSINESS WIRE)--On the effective date of Sept. 15, 2010, Fitch Ratings will confirm the 'F1+' short-term rating assigned to the city of Colorado Springs, Colorado variable rate demand (VRD) utilities system subordinate lien improvement revenue bonds, series 2005A. (the bonds). The short-term rating action is in connection with the substitution of the liquidity support provided by State Street Bank and Trust Company (rated 'A+/F1+'with a Stable Outlook by Fitch) in the form of a Standby Bond Purchase Agreement (SBPA), with a substitute SBPA issued by Bank of America, N.A. (rated 'A+/F1+' with a StableOutlook). The 'AA' long-term rating assigned to the bonds continues to be based on the subordinate lien obligations of the city of Colorado Springs utilities system and the city's pledge of the net revenues of its utilities system.

“Rating Guidelines for Variable-Rate Demand Obligations Issued with External Liquidity Support”

On the effective date, the short-term 'F1+' rating will be based on the liquidity support provided by Bank of America, N.A. in the form of a substitute SBPA. The substitute SBPA provides for the payment of the principal component of purchase price plus an amount equal to 35 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the weekly, monthly and quarterly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The substitute SBPA will expire on Sept. 15, 2012, the stated expiration date, unless such date is extended, conversion to a mode other than the weekly, monthly and quarterly rate; or upon the occurrence of certain other events of default which result in a mandatory tender or other termination events related to the credit of the bonds which result in an automatic and immediate termination. The short-term 'F1+' rating will expire upon the expiration or termination of the SBPA. The short-term rating may be adjusted upward or downward in conjunction with the long-term rating of the bonds or the short-term rating of the bank. A mandatory tender of the bonds is scheduled to occur on Sept. 1, 2010. Merrill Lynch, Pierce, Fenner & Smith Inc. is the remarketing agent for the bonds.

For more information on the long-term rating, see the report dated Aug. 16, 2010, available on Fitch's website at www.fitchratings.com.

Applicable criteria available on Fitch's website at www.fitchratings.com:

"U.S. Municipal Structured Finance Rating Criteria", Dec. 17, 2009;

"Rating Guidelines for Variable-Rate Demand Obligations Issued with External Liquidity Support", May 29, 2009.

Related Research:

U.S. Municipal Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548588

Rating Guidelines for Variable-Rate Demand Obligations Issued with External Liquidity Support

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=443146

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