Fitch Ratings has affirmed the 'AAA' rating on the Utah School Bond
Default Avoidance Program.
State guaranty - full faith and credit obligation of the state of Utah,
on par with the state's general obligation (GO) bonds.
KEY RATING DRIVERS
FULL FAITH AND CREDIT PLEDGE: The state's guaranty pledge on qualifying
school debt is a full faith and credit obligation, on par with that of
its own GO bonds. As a result, bonds qualifying for the program receive
an 'AAA' rating, equivalent to the state's GO bonds.
SOUND PROGRAM MECHANICS: Program mechanics allow sufficient time for
state funds to be made available to pay debt service by the debt service
ABILITY TO ISSUE STATE GO BONDS: If insufficient funds are on hand, the
state may issue GO bonds to meet its obligations under the guaranty.
The rating is sensitive to changes in the state's GO rating, to which it
Fitch will assign an 'AAA' rating to Utah school district GO bonds
qualifying for participation in the School Bond Default Avoidance
Program. The rating is based on the state's full faith and credit
guarantee provided as credit enhancement on qualifying school district
GO bonds. The state will use cash on hand or issue short-term GO notes
to meet a defaulting district's debt service obligation. Following a
payment by the state, the state treasurer is required to immediately
intercept any operating moneys distributed to the district by the state
to reimburse the state until all obligations of the school district are
paid in full. The state pledges that it will not alter, impair, or limit
the rights vested by the program to the bonds until the bonds are fully
paid and discharged, unless provision is made by law for protection of
Program mechanics allow sufficient time for state funds to be made
available to pay debt service by the debt service payment date. Moneys
for debt service are to be remitted by a school district's business
administrator to the paying agent at least 15 days prior to the debt
service payment date. Should a district be unable to meet its payment
obligation at that time, the business administrator must immediately
notify the paying agent and state treasurer by telephone and in writing
by either fax or U.S. mail. If sufficient moneys have not been received
at least 10 days prior to the payment date, te paying agent must
immediately notify the state treasurer by telephone and in writing by
either fax or U.S. mail. The state treasurer will then transfer to the
paying agent, on or before the payment date, sufficient moneys to make
the debt service payment.
As of fiscal year (FY) 2014, the state had guaranteed 280 bond issues
for 39 of the state's 41 school districts, for an aggregate principal
outstanding of $2.75 billion. Since the program's inception in 1997, the
state has never been called upon to pay debt service on any bonds
guaranteed under the program.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria', dated Aug. 14, 2012;
--'U.S. State Government Tax-Supported Rating Criteria', dated Aug. 14,
--'Rating Guidelines for State Credit Enhancement Programs', dated April
Tax-Supported Rating Criteria
Rating Guidelines for State Credit Enhancement Programs
U.S. State Government Tax-Supported Rating Criteria
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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