Fitch Affirms $147MM Kansas Dept. of Transportation Bank Bonds Series 2004C at 'AA+'; Outlook Stable

NEW YORK--()--Fitch Ratings affirms the 'AA+' rating on $147 million bank bonds corresponding to the following Kansas Department of Transportation (KDOT) adjustable tender highway revenue bonds series 2004C:

--$32.01 million series 2004C-1;
--$33.315 million series 2004C-2;
--$34.675 million series 2004C-3;
--$47 million series 2004C-4.

The ratings are being affirmed in conjunction with the execution of a substitute liquidity agreement in the form of a standby bond purchase agreement between KDOT and Wells Fargo Bank, NA. The highway revenue bonds are special obligations of the state of Kansas.

Based on a review of the terms governing the bank bonds, it is Fitch's opinion that the incremental risk associated with bank bonds does not have a material impact on the long-term credit rating of KDOT's highway revenue bonds.

Fitch has also affirmed the 'AA+' rating on KDOT's $1.6 billion in outstanding highway revenue bonds.

The Rating Outlook is Stable.

SECURITY

The bonds are special obligations of the state of Kansas secured by a gross lien on and payable from revenues received in the State Highway Fund (SHF) and transferred to the highway bond debt service fund.

KEY RATING DRIVERS

DIVERSE REVENUE STREAM SUPPORTS BONDS: Bonds are secured by a gross lien on the SHF, which receives a diverse stream of broad-based revenues. Revenues credited to the fund are subject to legislative alteration, although certain monies are constitutionally dedicated to transportation.

STRONG DEBT SERVICE COVERAGE: The state covenants to ensure that revenues to the State Highway Fund equal no less than 3x annual debt service. Actual annual and maximum annual debt service (MADS) coverage has been well in excess of this requirement.

FUTURE BORROWING IS LIMITED: Issuance of additional highway revenue bonds requires 3x coverage of MADS. Additional leveraging is also limited such that MADS may not exceed 18% of current or future SHF revenues.

RATING SENSITIVITIES

The rating is sensitive to changes in KDOT's pledged revenue stream that supports its outstanding bond issues.

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

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
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015
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=821648
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Marcy Block, +1-212-908-0239
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Eric Kim, +1-212-908-0241
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

Sharing

Contacts

Fitch Ratings
Primary Analyst
Marcy Block, +1-212-908-0239
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Eric Kim, +1-212-908-0241
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