Fitch Rts $24.2MM IN Muni Power Agency VRD Power Supply System Rfdg Revs 2016 Ser B 'AA/F1+'

NEW YORK--()--Fitch Ratings has assigned a rating of 'AA/F1+' to the $24,225,000 Indiana Municipal Power Agency (the Agency) variable rate demand (VRD) power supply system refunding revenue bonds, 2016 series B. The Rating Outlook is Stable for the long-term (LT) rating.

KEY RATING DRIVERS:

The rating is based on the support provided by an irrevocable direct-pay letter of credit (LOC) issued by U.S. Bank National Association (rated 'AA/F1+', the LT rating with a Stable Outlook), which has an initial stated expiration date of Dec. 1, 2020, unless such date is extended or earlier terminated, while the bonds are in the daily or weekly interest rate mode only.

The bank is obligated to make regularly scheduled payments of principal of and interest on the bonds in addition to payments due upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 56 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the daily and weekly rate modes. U.S. Bancorp Investments, Inc. and U.S. Bank Municipal Securities Group are jointly the Remarketing Agents for the bonds. The bonds are expected to be delivered on or about Jan. 13, 2016.

The bonds initially bear interest at a daily rate, but may be converted to a weekly, flexible, term, or direct placement rate. While bonds bear interest in the daily and weekly rate modes, interest payments are on the first business day of each month, commencing Feb. 1, 2016. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held uninvested and are free from any lien prior to that of the bondholders.

Holders may tender their bonds on any business day, provided the tender agent and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate (other than conversion between the daily and weekly rate modes); (2) upon expiration, substitution or termination of the LOC; (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement, and (4) following receipt of notice from the bank that the interest component will not be reinstated directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds. There are no provisions for the issuance of additional 2016 series B bonds.

Bond proceeds will be used to refund the Agency's outstanding power supply system revenue bonds, 2006 series A and to pay costs of issuance.

RATING SENSITIVITIES

The rating is exclusively tied to the short- and long-term rating that Fitch maintains on the bank providing the LOC and will reflect all changes to that rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Rating Guidelines for Letter of Credit-Supported Bonds and Commercial Paper (pub. 21 May 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866152

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=996948

Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=996948

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

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, +1-212-908-0500
Analytical Consultant
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst:
Joseph Staffa, +1-212-908-0829
Senior Director
or
Committee Chairperson:
Mario Civico, +1-212-908-0796
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
New York
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst:
Kasia Reed, +1-212-908-0500
Analytical Consultant
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst:
Joseph Staffa, +1-212-908-0829
Senior Director
or
Committee Chairperson:
Mario Civico, +1-212-908-0796
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
New York
elizabeth.fogerty@fitchratings.com