Oregon will issue six series of revenue bonds backed by the state lottery to raise $412 million for capital projects around the state.
Moody's Investors Service rated the bonds Aa2 on Dec. 22 as Standard & Poor's conferred its AAA rating. The bonds are expected to price Jan. 8, Moody's said.
"The Aa2 rating incorporates the historically strong performance of the state lottery, recognizing the one time sharp revenue decline during the last economic downturn," Moody's analyst Kimberly Lyons said.
The bonds are secured by a lien on unobligated net lottery proceeds. The pledge is senior to a constitutional 18% set-aside of net lottery revenues for the state's education stability fund and another constitutional 15% set-aside for parks and natural areas, according to S&P.
In addition to Oregon's lottery revenues, the bonds are secured by a moral obligation pledge of the state that requires the Department of Administrative Services to request the Legislative Assembly or Emergency Board to authorize the deposit of other legally available state funds into the bonds' debt service reserve if the funding level falls below the required amount.
"While the moral obligation does not require the state to appropriate funds for such purpose, statutory language has been adopted which stipulates that the Legislative Assembly acknowledges its intention to provide appropriated funds for this purpose," Lyons said.
