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Fitch's Investors Service
Fitch credit ratings are an opinion on the ability of an entity or of a securities issue to meet financial commitments, such as interest, preferred dividends, or repayment of principal, on a timely basis.
Credit ratings are used by investors as indications of the likelihood of getting their money back in accordance with the terms on which they invested. Fitch credit and other ratings are not recommendations to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of any payments of any security. The ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch believes to be reliable.
Fitch Investors Service:
Write-up Regarding the City of Indianapolis
The rating on Indianapolis Local Public Improvement Bond Bank, Ind.’s bonds, issued for Indianapolis, reflects the city’s moral obligation pledge to replenish the debt service reserve. As such, the rating reflects the city’s credit characteristics and reliance on appropriations by the city-county council.
Bond proceeds will be used to purchase qualified obligations of the sanitary district of the city of Indianapolis, which are secured by net revenues of the district derived from sewer user fees. The Bond Bank bonds will in turn be purchased by the Indiana State Wastewater Revolving Loan Fund. Loan proceeds will finance various projects of the sanitary district.
The Bond Bank will deposit, either in the form of a credit instrument or from proceeds of the bonds, an amount equivalent to the lesser of maximum annual debt service, 125% of average annual debt service, or 10% of bond proceeds. If pledged revenue is insufficient to meet debt service requirements, the trustee will draw upon this debt service reserve in an amount sufficient to ensure full and timely payment of principal and interest. Once drawn upon, or if at any other time there is a depletion or deficiency in the debt service reserve fund, the chairman of the Bond Bank is directed to certify to the city-county council the amount needed to restore the reserve fund to its required level. Such certification must be made on or before Dec. 1 of the year prior to the fiscal year in which the deficit is projected to occur, or within 90 days of such projection, whichever is earlier. The city-council is not legally obligated to appropriate funds to replenish the debt service reserve to its fully funded reserve requirement.
Sufficient cushion exists to allow the city-county council to honor its moral obligation through an appropriation made through the normal budgetary process. Additionally, the city-county council meets periodically and could honor this obligation through supplemental appropriation
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