MOODY’S INVESTOR SERVICES UPGRADES SSF CREDIT RATING….

Rating Action:

Moody’s upgrades South San Francisco,

CA’s hotel tax bonds to A2

Global Credit Research – 09 Oct 2013

 New York, October 09, 2013 — Moody’s Investors Service has upgraded to A2 from A3 the city of South San Francisco’s (CA) Conference Center Tax revenue bonds, affecting $2.5 million in rated debt outstanding. The bonds are secured by a citywide $2.50 per room, per night transient occupancy tax levied and collected by the city.

 SUMMARY RATING RATIONALE

The upgrade to A2 from A3 reflects the city’s resilient taxable hotel base that has maintained above average occupancy rates through the economic downturn, where occupancy rates outpaced industry growth projections. The A2 rating also considers the city’s favorable location betwee

n the San Francisco International Airport (SFO) and the city of San Francisco that contributes to strength of the otherwise narrow hotel tax security.

STRENGTHS

– Ample coverage levels driven by strong performance of pledged revenue

– Modest amount of quickly retired debt

– No additional bonds or obligations permitted

 CHALLENGES

– Pledged revenue is a static tax variable by occupancy rate

– Narrow revenue base on limited number of taxable operators

 

 WHAT COULD MAKE THE RATING GO UP

– Material increase in taxable hotel operators in the city

 

WHAT COULD MAKE THE RATING GO DOWN

– Decrease in pledged revenues that result in weaker MADS coverage

– Macroeconomic disruption that materially decrease air travel through SFO that negatively impact hotel occupancy rates

The principal methodology used in this rating was US Public Finance Special Tax Methodology published in March 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

 

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

 

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Michelle Young Choi

Associate Analyst
Public Finance Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Kevork Khrimian
Vice President – Senior Analyst

Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

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