NEW YORK - (Business Wire) Fitch Ratings assigns an 'A+' rating to the Municipal Gas Authority of Georgia's (the Authority) expected issuance of $100 million of Gas Revenue Portfolio III bonds (Gas Portfolio III) taxable series F, and affirms the $360 million outstanding bonds at 'A+' and 'F1+'. The Rating Outlook is Stable. The bonds are direct and general obligations of the Authority and will refinance a portion of its outstanding indebtedness incurred for its long-term supply projects including providing funds to the Public Gas Partners, Inc (PGP), a joint-action consisting of six members including the Authority.
The rating reflects the Authority's diverse portfolio of long-term gas supply that includes both prepaid supplies and natural gas reserves and provides discounts to members in different price environments, timely recovery of costs, and an experienced management team that has delivered consistent gas services for over 20 years (including discounts to market prices) to its members. Credit weaknesses include concentration of retail member sales in industrial loads and slowing gas sales due to the economic recession. An additional credit concern includes the above-average proportion of short-term debt that is subject to regular refinancing risk with relatively low levels of internal liquidity.
Fitch notes that the Authority has increased its funded cash reserves to $40 million from $20 million by restructuring certain long-term supply arrangements. These funds, together with $65 million of available lines of credit are currently sufficient to retire one of the staggered $100 million of short-term obligations (with $100 million of notes coming due every six months once refinanced in late 2009) should market disruptions prevent debt renewal.
The Authority is the largest natural gas joint action agency and manages wholesale gas supply for its 76 all-requirements members and nine partial-requirement partners. All members are local gas distribution systems owned and operated by their respective cities. The majority (82%) of the members is located within the State of Georgia and their court-validated obligation is paid as an operating and maintenance expense and backed by the full faith and credit of their respective cities, which Fitch considers to be of a generally strong credit quality.
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Fitch Ratings, New York
Drake Richey, +1-212-908-0325
Karl Pfeil, +1-212-908-0516
Media Relations:
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com
