MFABCMunicipal Finance Authority of British Columbia (Canada)
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Funds received are invested by the Authority and held as an offset against the associated source of financing, which is typically accomplished through providing clients with budget certainty (a fixed loan repayment stream), while eliminating the requirement for 'balloon payments' at loan expiry (MFABC, 2013: 11).
At the time of writing the Municipal Association of Victoria (MAV) was poised to establish a pooled borrowing vehicle for councils, bonds for which will be issued as secure obligations of the MAV in a similar way that they are issued by the LGFA and the MFABC. Moody's Investor Services assigned an Aa2 issuer rating to the LGFV, stating: "The very high credit quality of the participating councils and the mature and supportive institutional framework under which they operate support the ratings " (Moody's Investor Service, 2014).
For instance, are there any advantages of the MFABC's two-tiered governance structure (a 39 member authority that appoints a ten-member Board of Trustees) over and against the more sharply structured executive of the NZLGFA?
MFABC issues bullet maturities and benefits from excellent access to capital, as demonstrated through credit facilities and frequent long- and short-term borrowings to finance client loans.
Outstanding MFABC debt consists of approximately C$7.5 billion in debentures and approximately C$700 million in commercial paper (CP) generally used for interim financing.
The long-term debentures are issued in bullet maturities, which expose MFABC to refinancing risk although demonstrated access to Canada's well-established capital markets are an offsetting factor.
MFABC invests these payments under strict statutory guidelines with the majority in federally or provincially-guaranteed securities.
When the authority increased the CP program to $700 million several years ago, MFABC increased the dedicated lines of credit to maintain 50% coverage of the full CP program.
SOLID LIQUIDITY AND MARKET ACCESS: MFABC benefits from excellent access to capital as demonstrated through credit facilities and frequent long and short-term borrowings to finance client loans.
The provincial government of British Columbia (IDR 'AAA'/Outlook Stable) exercises significant oversight of its local governments, including explicit control over borrowing through MFABC.
FUNDAMENTAL CREDIT CHARACTERISTICS: The rating is sensitive to a change in MFABC's prudent approach to borrowing, access to sufficient liquidity, or changes in the robust institutional framework provided by Canada.
Created in 1970, MFABC is the borrowing vehicle for all municipalities and regional districts in the Province of British Columbia, Canada and provides financing for general municipal projects, water and sewer infrastructure and transportation.