Moody's gives A2 to Austin hotel tax bonds

Moody's Investors Service said it assigned an A2 underlying rating to the $119.29 million series 2008 hotel occupancy tax subordinate-lien variable-rate revenue refunding bonds to be issued by the City of Austin, Texas.

The expected sale date is July 30.

Proceeds will refund outstanding subordinate-lien debt issued in 2005 in order to replace an insured standby bond purchase agreement with a letter of credit to be provided by Dexia Credit Local.

Concurrently, Moody's upgraded parity subordinate debt (to be refunded with the current issue) to A2 from A3, and $22.6 million of prior-lien hotel tax debt has been upgraded to A1 from A2.

The rating upgrade reflects a history of strong hotel tax revenue growth, ample debt service coverage, a healthy service area and no plans for additional debt issuance, the agency said.

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