NEW YORK--(BUSINESS WIRE)--On the effective date of Sept. 14, 2016, Fitch Ratings will downgrade the Long-Term rating to 'AA-' from 'AA' and affirm the Short-Term 'F1+'rating assigned to the $50,000,000 Clark County, Nevada Industrial Development Revenue Bonds (Southwest Gas Corporation Project) Series 2003A. The Rating Outlook for the Long-Term Rating is Stable.
The rating action is in connection with: (i) the substitution of the irrevocable direct-pay letter of credit (LOC) currently provided by Wells Fargo Bank, National Association (rated 'AA'/'F1+'/Stable Outlook) with a substitute LOC to be issued by JPMorgan Chase Bank, N.A (JPM, rated 'AA-'/'F1+'); and (ii) the mandatory tender of the bonds, which will occur on Sept. 14, 2016.
KEY RATING DRIVERS
On the effective date, the rating will be based on the higher of the underlying long-term rating assigned to the bonds by Fitch (currently rated 'A'/Stable Outlook) and the long-term rating assigned by Fitch to JPM, the bank providing the substitute LOC securing the bonds. The substitute LOC has an initial stated expiration date of Sept. 13, 2019, unless extended or earlier terminated, during the daily and weekly interest rate modes only. The Short-Term 'F1+' rating will be based solely on the LOC. For information about the underlying credit rating see press release dated Aug. 30, 2016, available at 'www.fitchratings.com'.
Pursuant to the substitute LOC, 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. Additionally, the bond obligor is in the flow of funds to make timely payments of principal and interest due upon maturity, acceleration and redemption. The JPM substitute LOC provides full and sufficient coverage of principal plus an amount equal to 52 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 weekly and daily rate modes. On the effective date, the Remarketing Agent for the bonds will be J.P.Morgan Securities LLC.
The long-term rating is tied to the Fitch long-term rating assigned to the bonds and the long-term rating that Fitch maintains on the substitute bank providing the LOC. Changes to one or both of these ratings may affect the long-term rating assigned to the bonds. The short-term rating is exclusively tied to the short-term rating that Fitch maintains on the bank providing the substitute LOC and will reflect all changes to that rating.
Additional information is available at www.fitchratings.com.