SAN FRANCISCO - (Business Wire) Fitch Ratings affirms its 'AA' long-term rating on approximately $93.6 million series 2008A variable-rate demand bonds issued by the Association of Bay Area Governments (CA) on behalf of Acacia Creek/Masonic Homes of California (MHC). The long-term Rating Outlook is Stable. The bonds also carry a Fitch short-term rating of 'F1+' based on a Bank of America standby bond purchase agreement.
--Strength of the guaranty agreement from Acacia Creek's parent company, MHC. The bonds are secured by an unconditional payment guaranty of principal and interest from MHC. Should there be insufficent funds in the revenue bond account, MHC covenants to transfer funds to the trustee one business day prior to the principal and interest payment dates. Additionally, within 20 days after each quarter, MHC agrees to transfer funds so that Acacia Creek's debt service coverage and days cash on hand (DCOH) are at least 1.1 times (x) and 200 DCOH, respectively. Moreover, MHC may not guaranty debt that amounts to more than 40% of MHC's and Acacia Creek's unrestricted cash and investment balances.
--Ample, but reduced financial resources of MHC. Despite investment losses, MHC maintains $521 million of unrestricted cash and investments as of Jan. 31, 2010. In addition, MHC holds $158 million of restricted funds.
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