Fitch Rates Oregon's GO Veterans Welfare Bonds, Series 2015P 'AA+/F1+'

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns an 'AA+/F1+' rating to the $25,140,000 State of Oregon general obligation (GO) bonds, 2015 series P (veterans welfare bonds series 95 [Variable Rate]). The Rating Outlook for the long-term rating is Stable.

KEY RATING DRIVERS

The long-term 'AA+' reflects a diverse economy with some concentration in manufacturing and agricultural products, moderate debt levels, the state's record of prompt actions to maintain financial flexibility, the maintenance of financial cushion to provide protection from revenue volatility, and well-funded pensions. Strong financial management is critical to the rating given a revenue structure largely dependent on the cyclical personal income tax (PIT), exposure to voter initiatives that can have negative fiscal impacts, and constitutional 'kicker' provisions that require the return of surplus personal income tax (PIT) revenues to taxpayers. For more information on the state of Oregon, see 'Fitch Rates Oregon's $115MM GOs 'AA+'; Outlook Stable' and 'Fitch Rates Oregon's $600MM Tax Anticipation Notes 'F1+' available on Fitch's website at www.fitchratings.com.

The short-term 'F1+' rating is based on the liquidity support provided by U.S. Bank National Association (rated 'AA/F1+', Stable Outlook) in the form of a Standby Bond Purchase Agreement (SBPA), which has a stated expiration date of May 18, 2018, unless extended or earlier terminated, during the daily, weekly and monthly interest rate modes only.

The SBPA provides for the payment of the principal component of purchase price plus an amount equal to 34 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the daily, weekly and monthly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The SBPA will expire on May 18, 2018, the stated expiration date, unless such date is extended; upon conversion to any interest rate mode other than daily, weekly or monthly; or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of the bond obligor which result in an automatic and immediate termination. The remarketing agents for the bonds are U.S. Bancorp Investments, Inc. and U.S. Bank Municipal Securities Group, a division of U.S. Bank National Association. The bonds are expected to be delivered on or about Nov. 19, 2015.

The bonds will be issued in the weekly rate mode, but may be converted to a daily, monthly, quarterly, semi-annual, indexed or fixed rate. While bonds bear interest in the weekly rate mode, interest is paid on the first business day of each month, commencing Dec. 1, 2015. Holders of bonds bearing interest in the daily, weekly and monthly rate modes may tender their bonds for purchase with the requisite prior notice. The tender agent is obligated to make timely draws on the SBPA to pay purchase price in the event of insufficient remarketing proceeds, and in connection with the expiration or termination of the SBPA, except in the case of the credit-related events permitting immediate termination or suspension of the SBPA.

Funds drawn under the SBPA are held uninvested, and are free from any lien prior to that of the bondholders. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon expiration, substitution or termination of the SBPA; and (3) following the receipt of written notice from the bank of an event of default under the SBPA, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.

Bond proceeds will be used to fund the redemption price of outstanding bonds.

RATING SENSITIVITIES

The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bond obligor. The long-term rating is exclusively tied to the creditworthiness of the bond obligor and will reflect all changes to that rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support (pub. 22 Jan 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=856189

U.S. Municipal Structured Finance Criteria (pub. 23 Feb 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=992880

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=992880

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE 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 WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151026006593/en/

Fitch Ratings
Primary Analyst
Janet Rosen, +1-312-368-3172
Analytical Consultant
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Richard Park, +1-212-908-0289
Director
or
Committee Chairperson
Linda Friedman, +1-212-908-0727
Senior Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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