Fitch Upgrades $61 Million in Orleans Parish Bonds

State’s Gulf Tax Credit Bond Sale Major Factor in Stable Rating Outlook

BATON ROUGE, LA – Fitch announced this past week that it has upgraded the ratings on $61 million in bonds for the New Orleans Sewerage and Water Board and the New Orleans Audubon Park Commission, according to State Treasurer John Kennedy.

“We are pleased with the upgrades, especially because the better the bond rating the cheaper it is to borrow money,” said Treasurer Kennedy. “There is still a lot of work left to do in the New Orleans area. If local entities continue to keep their finances in order and pay their debt service, there could be more bond upgrades in the future. This is important for public entities that may need to borrow money to complete rebuilding and recovery efforts.”

Fitch upgraded $24.9 million in Sewerage and Water Board bonds to BBB- from BB and $36.3 million in Audubon Commission bonds to BB+ from BB. In a news release, Fitch said the rating outlook for the bonds was stable and a major factor was the state’s 2006 sale of Gulf Tax Credit Bonds and match bonds.

Pursuant to the Gulf Opportunity Zone Act of 2005, the state sold $400 million in Gulf Tax Credit bonds and match bonds to assist 13 Orleans area political agencies with debt service payments. The Sewerage and Water Board received $77.5 million in loan proceeds from the sale, and the Audubon Commission received $16.8 million. The funds enabled the entities to pay debt service and free up financial resources for operational needs.

“Gulf Tax Credit Bonds were an innovative financing tool for Louisiana, and this was the first time any state had sold such a large principal amount of bonds carrying a federal tax credit,” said Treasurer Kennedy. “Fitch credited the sale for the Sewerage and Water Board and Audubon Commission bonds’ stable rating outlook. This shows how important Gulf Tax Credit Bonds were in assisting local governments with debt service relief.”
 

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