The series 2016 bonds are expected to be issued as fixed rate debt. Bond proceeds will be used to refund outstanding revenue and refunding bonds, series 2007 and pay the costs of issuance. The bonds are expected to sell via a negotiated sale the week of
The Rating Outlook is Stable.
The bonds are secured by payments made by the Authority and the source of these payments is solely a general unsecured obligation of the Archdiocese.
KEY RATING DRIVERS
FINANCIAL FLEXIBILITY: The Archdiocese has substantial flexibility in raising revenues through increasing the fees assessed to its 111 member parishes as well as the fees charged on a per student basis for all students attending 84 affiliated schools. Further, unrestricted cash and investments is a substantial
ADEQUATE DEBT SERVICE COVERAGE: Since 2013, coverage of pro forma maximum annual debt service (MADS) has ranged between 1.61x and 2.09x. Pro forma MADS includes 20% of the debt service related to a
LONG HISTORY AS SOLE SERVICE PROVIDER: The Archdiocese has been in existence since 1793, incorporated in 1941, and provides support to its various affiliated entities. It holds all of the excess funds of the parishes and affiliated entities, is the required financing arm for these organizations, and procures insurance for the entities and the diocesan priests. The Archdiocese lost parishioners post-Katrina, but the number now exceeds the pre-Katrina level.
REVENUE STABILITY: The rating is sensitive to the
LIMITED USE OF THE GUARANTEE: The Archdiocese's ability to refrain from guaranteeing further debt is assumed in the rating in conjunction with the lack of additional debt plans. Any deviation from either of these assumptions, without a commensurate increase in financial resources, would likely pressure the rating and/or outlook. One such guarantee is the debt issued for St. Anthony's Garden, a senior living housing project ministry. This guarantee is expected to roll off in the near term.
The primary activities of the Archdiocese's Administrative Offices include the maintenance of the
Not included in the financial operations or assets of the Administrative Offices are the individual parishes, elementary and high schools, nursing homes, affordable senior living facilities, or other church-related agencies and institutions within the corporation's geographical boundaries. Also not included are the fair market values of the churches, nursing homes, affordable senior living facilities, other properties in the parishes, rectories, schools belonging to the corporation, or The
DEPOSIT AND LOAN FUND
A core component of the operations of the Archdiocese's Administrative Offices is the
The fund provides low interest loans to the affiliated entities for construction, renovations, and emergency needs. Management provided some details regarding the underwriting criteria, which included the borrower providing proof to the Archdiocese that: 50% of project costs are on deposit in the
The interest rate on deposits equals the 90-day
Another potential source of liquidity is the Archdiocese's real estate portfolio. This portfolio of properties/parcels has been acquired through either the closing of parishes or through gifts and properties could be liquidated to support operations. Some of these assets, donated many years ago, are not currently included in the Archdiocese's balance sheet.
OTHER ADMINISTRATIVE OFFICE ACTIVITIES
In addition to managing the
As calculated per the terms of the bond covenants, unrestricted cash and investments totaled approximately
Along with this refunding, management is electing to pay down approximately
Historically, maximum annual debt service coverage (MADS) of the 2007 bonds has been good, ranging from a low of 1.83x to a high of 2.38x during the past four years. When including the St. Anthony 20% guarantee, MADS coverage declines but still ranges between 1.61x and 2.09x. The most conservative stance, assuming 100% of the debt service on the St. Anthony project, MADS coverage is sufficient, ranging between 0.99x to 1.29x. These calculations were provided by the Archdiocese and are in accordance with required bond covenants.
STABILITY IN GOVERNANCE
The Archbishop, in place since 2009, is the chief administrator of the Archdiocese, with a Vicar General who is responsible for the financial and administrative services. In turn, there are three lay people who report to the Vicar General - including the chief financial officer and secretary, chief operating officer and a chief compliance officer.
In addition to these positions, the Archbishop is also advised by Archdiocesan Councils on matters of policies, procedures and practices.
The corporation anticipates adopting a continuing disclosure policy prior to the bond issuance to ensure its ability to maintain compliance with the SEC Rule 15c2 12 Continuing Disclosure Requirements, including the designation of a specific officer or officers to take responsibility for all future filings of financial statements, annual financial information and operating data and event notices.
Additional information is available at 'www.fitchratings.com'.
Revenue-Supported Rating Criteria (pub.
Dodd-Frank Rating Information Disclosure Form
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