New York, November 30, 2012 -- Moody's Rating
Issue: General Obligation Refunding Bonds of 2013, Series A; Rating: Aa1; Sale Amount: $32,280,000; Expected Sale Date: 01/31/2013; Rating Description: General Obligation
Issue: General Obligation Bonds, Series 2013; Rating: Aa1; Sale Amount: $45,000,000; Expected Sale Date: 01/31/2013; Rating Description: General Obligation
Moody's Investors Service has assigned a Aa1 underlying rating to the City of Tulsa's (OK) $45 million General Obligation Bonds, Series 2013, and $32.3 million General Obligation Refunding Bonds of 2013, Series A. Concurrently, we have assigned a stable outlook to the rating. In addition, we have affirmed the Aa1 rating on the city's outstanding parity debt affecting $480.8 million inclusive of the current sale. Proceeds of the Series 2013 will be used to further the city's street project in line with its capital improvement program. Proceeds of the Series 2013A will be used to refund certain maturities of the city's outstanding Series 2005 bonds for an expected net present value savings of 13.5% and no extension of final maturity. The bonds are secured by a continued and direct annual ad valorem tax, levied on all taxable property in the city, without legal limitation as to rate or amount.
SUMMARY RATING RATIONALE
The rating reflects the city's sizable tax base and role as a regional economic center. The rating also reflects a history of strong financial management characterized by restoration of reserve levels, strong dependence on economically sensitive sales tax revenues coupled with limited revenue raising flexibility, and a manageable debt profile with rapid amortization of principal.
The stable outlook reflects our belief that the city will continue to maintain sizeable reserve levels sufficient to mitigate the city's dependence on volatile revenue streams. It also reflects the city's role as regional economic center, evident in its sizeable and stable tax base.
Regionally significant economic center and stable tax base
History of sound financial management practices yielding solid reserves
Significant dependence on economically sensitive sales tax revenues
Limited revenue raising flexibility given restrictions imposed by state constitution
Economic downside risk of reduced workforce at American Airlines maintenance facility
The stable outlook reflects our expectation that the city will continue to maintain its position as the regional economic center in the metropolitan area, and our belief that the city will continue to maintain solid reserve levels sufficient to mitigate the city's dependence on volatile revenue streams.
WHAT COULD MAKE THE RATING GO UP
Significant tax base expansion coupled with improved socioeconomic profile
Trend of operating surpluses yielding bolstered financial reserves
WHAT COULD MAKE THE RATING GO DOWN
Erosion of financial reserves
Significant economic contraction
Substantial increases in debt burdens without corresponding tax base growth
The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
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