The often reviewed multi-billion-dollar long-term natural gas deals secured in the past four years by major public-sector utilities received another credit review by the two major rating agencies, following a downgrade earlier in February of MBIA Insurance Corp. of Illinois (from “AA” to “BBB+”), a major player in backing the municipal revenue bonds that support the gas buys. Several deals continue to carry “negative” outlooks as a result.

Standard & Poor’s Ratings Services (S&P) reviewed deals involving the Southern California Public Power Authority (SCPPA), Northern California Gas Authority No. 1, Texas Municipal Gas Acquisition and Supply Corp., Public Authority of Colorado and American Public Energy Agency, and Moody’s Investors Service looked at the Municipal Gas Authority of Georgia.

S&P last Friday affirmed SCPPA’s “A” senior secured debt rating of $504 million of gas project revenue bonds, but kept a “negative” outlook on its prepaid gas deal financing in the wake of lowering of MBIA’s ratings. The move would have had more of an impact on the SCPPA bonds, but MBIA Illinois has issued a new reinsurance policy that S&P said provides “additional credit support” to the original MBIA policy.

A financing arm for a dozen public-sector utilities in Southern California, SCPPA’s bond proceeds paid for the prepayment of about 135 Bcf of natural gas scheduled to be delivered during the next 30 years to five SCPPA member power utilities (see Daily GPI, Nov. 30, 2007).

S&P gave similar affirmation with a negative outlook to the Northern California authority’s $757 million in gas project revenue bonds — $668.5 million (2007B) and $68.5 million (2007A), following the MBIA downgrade. The gas buying authority originally obtained the supplies for the Sacramento Municipal Utility District and other Northern California public-sector power providers.

Ratings for the Texas municipal gas authority, Colorado public authority, and Nebraska-based American Public Energy Agency were all similarly affirmed after Transamerica Life Insurance Co. (TLIC) was placed on a “credit watch negative” outlook. TLIC is provider of guaranteed investments to bondholders for the Texas gas acquisition bonds totaling nearly $2 billion; $653.2 million in Colorado public-sector gas bonds; and $306 million in American Public Energy revenue bonds.

Earlier Moody’s affirmed the ratings on the Georgia gas authority’s $35.5 million in bonds that were secured by letters of credit from JPMorgan Chase Bank NA and Wachovia Bank NA. “The reimbursement agreement and letter of credit have been amended to eliminate JPMorgan Chase and alter the commitment for Wachovia,” Moody’s said.

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