Fitch to Confirm 'F1' S-T Rating on Colorado Springs, CO's 2004A Var-Rate Utilities System Sub Bonds

NEW YORK--()--On the effective date of Aug. 1, 2014, Fitch Ratings will confirm the short-term rating of 'F1' assigned to the $117,450,000 ($103,725,000 currently outstanding) City of Colorado Springs, Colorado variable rate demand utilities system subordinate lien refunding revenue bonds, series 2004A (the bonds).

The short-term rating action is in connection with: (i) the substitution of the liquidity support provided by Citibank, N.A. (rated 'A/F1', Stable Outlook) in the form of a Standby Bond Purchase Agreement (SBPA), with a substitute SBPA to be issued by Bank of America, N.A. (rated 'A/F1', long-term rating on Negative Outlook); and (ii) the mandatory tender of the bonds, which will occur on Aug. 1, 2014.

KEY RATING DRIVERS:

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 long-term 'AA' rating assigned to the bonds continues to be based on the rating assigned by Fitch to the utility revenue bonds of the City of Colorado Springs, payable from the City's pledge of the net revenues of its utilities system. The Rating Outlook is Stable for the long-term rating. For more information on the long-term rating, see the press release date 'Fitch Rates Colorado Springs (CO) Series 2013B Rev Bonds 'AA'; Outlook Stable' dated Sept. 10, 2013, available on Fitch's website at www.fitchratings.com.

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 rate mode 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 August 1, 2016, the stated expiration date, unless such date is extended; upon conversion to a mode other than the weekly rate mode; or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of the utility revenue bonds of the City of Colorado Springs which result in an automatic and immediate termination. The short-term 'F1' rating will expire on the expiration or prior termination of the SBPA. A mandatory tender of the bonds is scheduled to occur on the SBPA substitution date on Aug. 1, 2014. The remarketing agent for the bonds is J.P. Morgan Securities LLC.

RATING SENSITIVITIES:

The short-term rating reflects the short-term rating that Fitch maintains on the bank providing the substitute SBPA and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bonds. The long-term rating is exclusively tied to the creditworthiness of the utility revenue bonds of the City of Colorado Springs and will reflect all changes to that rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria', Feb. 24, 2014;

--'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support', Jan. 27, 2014.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736618

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730736

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
Kasia Reed
Analytical Consultant
+1-212-908-0500
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Trudy Zibit
Managing Director
+1-212-908-0689
or
Committee Chairperson
Joseph Staffa
Senior Director
+1-212-908-0829
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Kasia Reed
Analytical Consultant
+1-212-908-0500
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Trudy Zibit
Managing Director
+1-212-908-0689
or
Committee Chairperson
Joseph Staffa
Senior Director
+1-212-908-0829
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com