Fitch Rates Indiana Finance Authority's 2008A-2 Convention Center Bank Bonds 'AA+'; Outlook Stable

NEW YORK--()--Fitch Ratings assigns an 'AA+' rating to bank bonds associated with the Indiana Finance Authority's (IFA) (Convention Center Expansion Project) lease appropriation bonds, series 2008A-2.

The Rating Outlook is Stable.

The rating is being assigned in conjunction with the substitution of the IFA's self-liquidity program with a standby bond purchase agreement (SBPA) to be issued by BMO Harris Bank N.A. (BMO Harris, rated 'AA-/F1+', Stable Outlook). The SBPA is scheduled to be effective as of Feb. 3, 2014. For more information on the liquidity substitution, see 'Fitch to Revise 'F1+' S-T Rating on IFA Lease Appropriation Bonds (Convention Center) Series 2008A-2'' dated Jan. 27, 2014.

SECURITY
The bonds are limited obligations of the IFA, secured by biennial state legislative appropriations. However, the state expects that earmarked tax revenues will be sufficient to pay debt service and state general fund revenues will not be necessary for this purpose.

KEY RATING DRIVERS

APPROPRIATION SECURITY: Bond payment relies on biennial legislative appropriations, although appropriation risk is mitigated by the state's reliance on appropriation debt to fund its capital program and the requirement of legislative approval for projects and financings. General obligation debt is constitutionally prohibited.

LOW DEBT BURDEN: Indiana's low debt burden is one of the key credit strengths underlying its high rating. Debt issued for a stadium and convention center project is expected by the state to be self-supporting from earmarked local tax revenues.

HIGH RESERVE LEVELS: Indiana's budgeting has been strong, and the state maintained budget balance and a solid reserve position despite weakened economic and revenue performance in the recession.

MANUFACTURING-HEAVY ECONOMY: The state's economy remains considerably concentrated in manufacturing, particularly of transportation equipment, which exposes it to economic downturns.

RATING SENSITIVITIES
The rating is sensitive to shifts in fundamental credit characteristics including the state's commitment to strong financial management practices.

CREDIT PROFILE
Based on a review of the terms governing bank bonds specified in the SBPA, it is Fitch's opinion that the incremental risk associated with bank bonds does not have a material impact on the state's long-term lease appropriation credit rating.

Given that the bonds are ultimately payable from biennial state appropriations, the 'AA+' rating rests on the credit quality of the state. Indiana's credit is characterized by a historical pattern of low debt, balanced financial operations, and a commitment to funding reserves to provide a cushion in times of economic and revenue decline. These strengths are somewhat offset by an economy that, despite ongoing diversification, remains heavily concentrated in the cyclical manufacturing industry.

Additional information is available at 'www.fitchratings.com'.

In addition to the sources of information identified in Fitch's report 'Tax-Supported Rating Criteria', this action was additionally informed by information from IHS Global Insight and the underwriter.

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

Applicable Criteria and Related Research:
U.S. State Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686033

Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=819236
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Contacts

Fitch Ratings
Primary Analyst
Eric Kim, +1-212-908-0241
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Karen Krop, +1-212-908-0661
Senior Director
or
Committee Chairperson
Laura Porter, +1-212-908-0575
Managing Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Eric Kim, +1-212-908-0241
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Karen Krop, +1-212-908-0661
Senior Director
or
Committee Chairperson
Laura Porter, +1-212-908-0575
Managing Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com