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���������ֳ�-New York-18 April 2013: ���������ֳ� assigns an 'A' rating to Reedy Creek Improvement District, Florida (the District) $28.1 million utility revenue refunding bonds, series 2013-1. The bonds are expected to price the third week of May.

The series is scheduled to mature on Oct. 1, 2023, and will not extend the current maturity structure. Proceeds will be used to advance refund series 2003-1 bonds for economic net present value savings equal to about $5 million, or 15% of refunded par, based on current market conditions.

In addition, ���������ֳ� affirms the following ratings for the District:

--$38.87 million Utility Revenue Bonds series 2003-1 at 'A';
--$158.36 million Utility Revenue Bonds series 2003-2 at 'A';
--$26.93 million Utility Revenue Bonds series 2005-1 at 'A';
--$52.06 million Utility Revenue Bonds series 2005-2 at 'A'.

The Rating Outlook is Stable.

SECURITY

The bonds are secured by a first lien on net revenues of the combined utility system, after payment of operations and maintenance costs.

KEY RATING DRIVERS

INTEGRATED UTILITY SYSTEM: The District is a vertically integrated system that meets its energy requirements through a combination of owned generation (59.6 megawatt hours [MW]) and purchase power agreements (151 MW). Load requirements are dominated by the Florida-based theme parks owned by the Walt Disney Company (Disney; rated 'A/F1' with a Stable Outlook by ���������ֳ�).

CORRELATION WITH DISNEY RATING: The District's rating is correlated with, but not directly linked to Disney, given that the District relies on Disney for a substantial proportion of its revenues. Disney's credit quality has been a positive rating factor for the District in recent years.

THEME PARKS CRITICAL TO DISNEY OPERATION: The theme parks and resorts located within the service territory are important to Disney's financial operations, and ���������ֳ� believes that making payments to the District for utility services are a high priority for Disney.

MARGINAL FINANCIAL METRICS: The District's financial metrics are weak compared to other ���������ֳ�-rated retail utility systems, with debt service coverage (DSC), liquidity, and equity to capitalization ratios of 1.27x, 37 days, and 16.1%, respectively, for fiscal 2012. Equity to capitalization is expected to substantially improve in the medium term due to the District's rapidly amortizing debt profile; 74.6% of its debt is scheduled to mature by 2019.

FAVORABLE, BUT SHORT-TERM POWER CONTRACTS: The majority of the District's power supply is contracted under two- to three-year terms. Although the short-term contracts have resulted in a significant reduction in the wholesale power cost due to favorable market conditions in recent years, the duration of these agreements exposes the utility to longer-term price uncertainty.

VULNERABILITY OF BOARD INDEPENDENCE: Disney's unique ability to elect board members by virtue of its dominant land ownership is a concern. Therefore, the election of independent, objective directors could be compromised.

RATING SENSITIVITIES

DISNEY CREDIT QUALITY FACTORED: Given the sizable concentration of essential utility services provided to the Disney theme parks and resorts, Disney's credit quality will remain a factor in the District's rating.

INDEPENDENT RATE SETTING: Support for necessary rate increases, irrespective of Disney's operating performance, is key to maintaining the District's financial position and rating.

CREDIT PROFILE

MARGINAL, BUT STABLE FINANCIAL METRICS

The District's key financial metrics are below the medians for comparable retail utility systems.

Fiscal 2012 debt service coverage was 1.27x, an improvement over the five-year (2007 - 2011) average of 1.15x, but still lower than historical levels. Fiscal 2012 cash on hand was a low 37 days. However, management's inherent flexibility to raise rates within 60 - 90 days and a supportive working relationship with Disney partially mitigates this concern.

Fiscal 2012 leverage (Debt to FADS) and equity to capitalization ratios were 6.3x and 16.1%, respectively. The high leverage, however, is offset by a rapidly amortizing debt balance and sizeable maturities scheduled in 2020. Equity to capitalization is also expected to improve in the coming years as a result.

DISTRICT EXPOSED TO THE DISNEY OPERATION

Disney's business dominance in the service area exposes the District to high customer concentration, as it accounted for 83.4 % of utility operating revenues in 2012. The parks and resorts businesses, which account for 31% of Disney's revenue, have exhibited a degree of resiliency in the recent sluggish macroeconomic backdrop but remain at risk in the event of additional economic uncertainty. Should macroeconomic volatility return, ���������ֳ� expects these cyclical businesses to be under renewed pressure but that the Disney credit and financial profile will likely remain within its current ratings. Utility reliability is an integral part of this operation and it is ���������ֳ�'s view that Disney places a high priority on making payments to the District for utility services, thereby supporting the District's 'A' rating.

Contact:

Primary Analyst
Michael Mohammed Murad
Associate Director
+1-212-908-0757
���������ֳ�, Inc.
One State Street Plaza
New York, NY 10004

Secondary Analyst
Ryan Greene
Director
+1-212-908-0593

Committee Chairperson
Alan Spen
Senior Director
+1-212-908-0594


Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com.

Additional information is available at ''.

In addition to the sources of information identified in ���������ֳ�'s Revenue-Supported Rating Criteria and U.S. Public Power Rating Criteria, this action was informed by information from CreditScope.

Applicable Criteria and Related Research:
--'U.S. Public Power Rating Criteria' (Dec. 18, 2012);
--'Revenue-Supported Rating Criteria' (June 12, 2012).

Applicable Criteria and Related Research



Additional Disclosure