Financing GE's battery plant
Moody's Investors Service has assigned a "best quality" rating to $5 million worth of bond anticipation notes that will help General Electric purchase production equipment for a new battery plant at its Schenectady campus.
The Schenectady County Metroplex Development Authority owns the notes, which are used as short-term financing with the expectation that proceeds from a larger, future bond issue will cover the anticipation notes. The MIG 1 rating, which means the notes have strong protection, factored in Metroplex's long-term credit quality and "satisfactory history" of market access for short-term financings.
GE is planning to invest $170 million in the new plant, which will create 450 new jobs. The company was required to meet investment and job thresholds before Metroplex pays them $5 million toward equipment, said Metroplex Chairman Ray Gillen.
"GE has met or exceeded all of these thresholds so it is time for Metroplex to provide our funding to GE," said Gillen in an email.
A better rating translates into a lower interest rate, he added.
Moody's currently maintains an A1 rating on $42.1 million of Metroplex sales tax-backed bonds. This means the bonds are considered upper-medium to high grade and subject to low credit risk.
The following is a summary of Moody's rationale behind this rating:
"The authority's A1 rating reflects historic sales tax growth in the county, its strengthening economy and satisfactory legal provisions. The rating also incorporates Moody's expectation that debt service coverage levels may decline, given new debt expected to be issued in the next year."