Fitch Rates $275.7MM North Carolina Muni Power Agency #1 Refunded Bonds 'AAApre'

NEW YORK--()--Fitch Ratings assigns a rating of 'AAApre' to the $275,745,000 North Carolina Municipal Power Agency Number 1 Catawba Electric Revenue Bonds, consisting of: $92,825,000 refunding series 2008A, due Jan. 1, 2016-Jan. 1, 2020 (partial refundings of all maturities except 2020); $35,455,000 refunding series 2008C, due Jan. 1, 2016-Jan. 1, 2020 (partial refunding of 2017 maturity); $64,660,000 refunding series 2009A, due Jan. 1, 2021-Jan. 1, 2026 (partial refundings); $1,335,000 series 2009C due Jan. 1, 2021 (partial refunding); $2,240,000 series 2010A, due Jan. 1, 2020; $72,805,000 refunding series 2012A, due Jan. 1, 2016- Jan. 1, 2020 (partial refundings of multiple coupons for each maturity, except that 3% bond maturing in 2020 is refunded in full); and $6,425,000 series 2012B, due Jan. 1, 2021. The Rating Outlook is Stable.}

The refunded bonds will be redeemed at par plus accrued interest, as follows: series 2008A bonds on Jan. 1, 2018; series 2008C bonds on Jan. 1, 2018; series 2009A on Jan. 1, 2019; series 2009C on Jan. 1, 2019. All other refunded bonds will be escrowed to maturity.

KEY RATING DRIVERS

The 'AAApre'; Stable Outlook rating is based on the pledge of securities in the irrevocable trust fund securing the bonds and reflects the express lien of the refunded bondholders on the funds and securities deposited irrevocably and that all amounts have been invested in direct non-callable obligations of the United States and direct non-callable senior unsubordinated obligations of Fannie Mae (FNMA), Freddie Mac (FHLMC) and the Federal Home Loan Bank (FHB). The U.S. full faith and credit is currently rated 'AAA', Stable Outlook by Fitch. As the ratings of FNMA and FHLMC are currently linked to the U.S. sovereign rating, any rating action on the U.S. sovereign rating will directly affect the rating on the bonds with escrow trust funds invested in those securities. Should Fitch's view of the strength of government support for FNMA/FHLMC be reduced or downgraded, the rating of FNMA/FHLMC may be delinked from the U.S. sovereign rating and may result in negative pressure on the rating of the bond series supported by those securities.

The bonds were refunded on July 23, 2015 with the proceeds of the issuer's Catawba Electric Revenue Bonds, $304,710,000 refunding series 2015A, $41,265,000 refunding series 2015B, and $23,930,000 refunding series 2015D (Federally Taxable) as well as amounts released from the bond funds and reserve funds and reserve and contingency funds previously securing the refunded bonds. The ratings apply to the bonds listed by CUSIP number, below.

Pursuant to three irrevocable refunding trust agreements, U.S. Bank National Association (rated 'AA-/F1+', Stable Outlook), as trustee, holds three separate special irrevocable trust funds, in trust for the benefit of the refunded bondholders. All cash and securities held in these funds are pledged irrevocably to the payment of principal and interest on the related refunded bonds when due, at maturity or earlier redemption. In the future, Fitch will review any proposed substitution or reinvestment of funds, which may only occur following receipt of confirmation that the action will not result in a reduction or withdrawal of the ratings on the related refunded bonds.

Causey Demgen & Moore PC verified the mathematical accuracy of computations relating to the adequacy of cash and securities deposited in the refunding trust funds to pay debt service requirements of the related refunded bonds. In the opinion of Causey Demgen & Moore, cash and securities deposited in respective refunding trust funds will produce amounts necessary to provide for timely payment of the related refunded bonds. Prior to accepting substitute investment securities or disbursing funds, the trustee must receive a new report verifying the continued sufficiency of escrowed funds to meet all future payments of principal and interest on the refunded bonds.

RATING SENSITIVITIES

The rating is currently tied to the U.S. sovereign creditworthiness and will reflect all changes to that rating. Should Fitch's view of the strength of government support for FNMA/FHLMC be reduced or downgraded, the rating of FNMA/FHLMC may be delinked from the U.S. sovereign rating and may result in negative pressure on the rating of the bond series supported by those securities.

The 'AAApre' rating applies to the bonds with the following CUSIP numbers:

658203Z56

658203Z64

658203Z72

658203Z80

658203H72

658203K37

6582032D5

658203K52

658203K60

658203K78

6582032F0

6582032G8

6582032H6

6582032J2

6582032K9

6582032L7

6582032T0

658203N83

6582032V5

6582032Y9

6582033D4

6582032W3

6582032Z6

6582032X1

6582033A0

6582033E2

6582033H5

6582033B8

6582033F9

6582033J1

658203R48

6582033C6

6582033G7

658203T20

Additional information is available at www.fitchratings.com.

Applicable Criteria

Guidelines for Rating Prerefunded U.S. Municipal Bonds (pub. 09 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=818549

U.S. Municipal Structured Finance Criteria (pub. 23 Feb 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=989001

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=989001

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Janet Rosen
Analytical Consultant
+1-312-368-3172
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Linda Friedman
Senior Director
+1-212-908-0727
or
Committee Chairperson
Joseph Staffa
Senior Director
+1-212-908-0829
or
Media Relations
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Janet Rosen
Analytical Consultant
+1-312-368-3172
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Linda Friedman
Senior Director
+1-212-908-0727
or
Committee Chairperson
Joseph Staffa
Senior Director
+1-212-908-0829
or
Media Relations
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com