NEW YORK--(BUSINESS WIRE)--On the effective date of Sept. 8, 2016, Fitch Ratings will affirm the short-term 'F1' rating assigned to the City of Jacksonville, Florida commercial paper notes series A (the notes). A maximum of $75,000,000 aggregate principal amount of authorized notes may be outstanding at any given time.
The rating action is in connection with (i) the substitution of the current irrevocable direct-pay letter of credit (LOC) provided by Barclays Bank PLC (rated 'A/F1'/Stable Outlook) supporting the notes, with a LOC to be provided by Bank of America, National Association, (BANA, rated 'A+/F1'/Stable Outlook) and (ii) the reoffering of the notes.
KEY RATING DRIVERS
On the effective date, the short-term rating on the notes will be affirmed at 'F1' based on the support of the substitute LOC to be issued by BANA, which has a stated expiration date of Sept. 8, 2021, unless extended or earlier terminated. The BANA substitute LOC provides coverage for the principal amount of the notes and interest on the maturity dates of the notes.
U.S. Bank National Association will continue as the Deputy Registrar and Paying Agent (DRPA) for the notes and as DRPA is directed to request an advance under the LOC to pay principal and interest on maturing notes. The substitute LOC provides sufficient coverage for the principal amount of notes and 270 days of interest calculated at 10% based upon a 365-day year.
The notes will be issued at par, with interest due at maturity. Following the occurrence of an event of default under the LOC, BANA may direct the DRPA to immediately stop the issuance of any additional notes. The bank will also notify the DRPA that the stated amount of the LOC shall be permanently reduced to the principal amount of notes then outstanding and interest due thereon, and shall be further permanently reduced following the maturity of any such notes. In such event, the substitute LOC will expire after all the notes supported by such LOC mature and have been paid from funds drawn on the substitute LOC. In addition, BANA may issue a final drawing notice directing the DRPA to draw on its LOC for the principal of and interest due on all notes outstanding, in which case the LOC will expire on the earlier of (a) the 15th calendar day after the date on which the DRPA received the final drawing notice and (b) the date on which the drawing resulting from the delivery of the final drawing notice is honored. J.P. Morgan Securities LLC continues as the dealer for the notes.
RATING SENSITIVITIES
The rating is exclusively tied to the short-term rating that Fitch maintains on the substitute bank providing the LOC and will reflect all changes to that rating.
Additional information is available at www.fitchratings.com
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