Rating Action: Moody's places 6 federal lease ratings under review for possible downgrade
New York, December 14, 2020 -- Moody's Investors Service has placed six federal lease ratings under review for possible downgrade. The review affects $788 million of rated debt.
Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM906900886 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer.
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The RUR for possible downgrade is prompted by Moody's review of leverage metrics and lease renewal risks as incorporated in the listed ratings. In our review, Moody's will evaluate whether the ratings appropriately capture the low probability but high severity bondholder risk in the non-renewal scenario. Moody's will consider a number of factors including but not limited to: (i) the amount of outstanding debt relative to the value of the project asset, (ii) factors influencing the likelihood of federal lease renewal, (iii) refinancing risk. Possible review outcomes could include confirmation of the existing ratings and outlooks, or downgrades of one or more notches.
We expect to conclude our review within 90 days.
- FBI San Diego (CA) Project, issued by the California Municipal Finance Authority
- Kernersville (NC) VA Outpatient clinic, issued by the National Finance Authority
- Birmingham (AL) VA Health Care Clinic, issued by the National Finance Authority
The six federal leases are ultimately secured by monthly lease payments made from a federal agency, either the Department of Veterans Affairs, Department of Energy or the General Services Administration, to the borrower/lessor. The bonds are also secured by mortgage liens on the leased facilities, and debt service reserve funds.
The United States has the world's largest economy and is the center of global trade and finance, with a gross domestic product of $21.4 trillion in 2019. Its population of 328 million is third-largest.
The principal methodology used in these ratings was Lease, Appropriation, Moral Obligation and Comparable Debt of US State and Local Governments published in July 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1102364. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
The List of Affected Credit Ratings announced here are all solicited credit ratings. Additionally, the List of Affected Credit Ratings includes additional disclosures that vary with regard to some of the ratings. Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM906900886 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items:
- Rating Solicitation
- Issuer Participation
- Participation: Access to Management
- Participation: Access to Internal Documents
- Disclosure to Rated Entity
- Endorsement
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Joshua Grundleger Lead Analyst State Ratings Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Baye Larsen Additional Contact State Ratings JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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