Fitch Take Rating Actions on Triborough Bridge and Tunnel Authority, NY's 2001C VRBS
--Long-term rating revised to 'AA+' from 'AA-'; Stable Outlook;
--Short-term rating downgraded to 'F1' from 'F1+'.
The rating action is in connection with: (i) the substitution of the standby bond purchase agreement (SBPA) previously provided by JPMorgan Chase Bank, N.A. (rated 'AA-/F1+', Stable Outlook) with an irrevocable direct-pay letter of credit (LOC) provided by Bank of Tokyo-Mitsubishi UFJ, Ltd. ('A/F1', Stable Outlook); and (ii) the Aug. 20, 2015 mandatory tender and remarketing of the bonds.
KEY RATING DRIVERS
The long-term rating has been determined using Fitch's dual-party pay criteria and is based jointly on the underlying rating assigned to those bonds by Fitch (currently rated 'AA-', Stable Outlook) and the long-term rating assigned by Fitch to the bank which will provide the LOC as support for the bonds. The previous 'F1+' short-term rating was based on the SBPA provided by JPMorgan Chase Bank, NA. The short-term 'F1' rating is now based solely on the LOC. For information about the underlying credit rating see report dated May 15, 2015, available at 'www.fitchratings.com'.
Fitch's dual-party pay criteria consider the likelihood of the failure of both a rated obligor and a bank LOC provider. The methodology results in a long-term rating that is up to two notches higher than the stronger of the two credits if the following conditions are met: (1) both entities have a rating of 'A' or higher; (2) the transaction is structured such that payments from both the municipal issuer and the bank are in the flow of funds and both entities would have to fail to perform before the bonds defaulted; and (3) the credit of the bank and the rated obligor have no more than a medium degree of correlation. Fitch has determined a low degree of correlation between the bank and the obligor which results in a rating of 'AA+' for the bonds. If either the underlying bond rating or the bank rating were downgraded to 'A-' or lower, the dual-party pay criteria could no longer be applied, and the long term rating assigned to the bonds would then be adjusted to the higher of the bank rating and the underlying bond rating.
Pursuant to the LOC, the bank is obligated to make regularly scheduled payments of principal and interest on the bonds in addition to payments due upon maturity and redemption, as well as purchase price for tendered bonds. The ratings will expire upon the earliest of: (a) Aug. 17, 2018, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion to a mode other than weekly rate; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 53 days of interest at a maximum rate of 9% based on a year of 365 days and purchase price for tendered bonds, while in weekly rate mode.
The long-term rating is tied to the long-term rating assigned to the bonds and the long-term rating that Fitch maintains on the bank providing the substitute LOC. Changes to one or both of these ratings may affect the long-term rating assigned to the bonds.
The short-term rating is exclusively tied to the short-term rating that Fitch maintains on the bank providing the substitute LOC and will reflect all changes to that rating.