NEW YORK--(BUSINESS WIRE)--On the effective date of July 6, 2011, Fitch Ratings will confirm the short-term 'F1+' rating assigned to the State of Texas Veteran's Housing Assistance Program series 2006A bonds (the bonds). The short-term rating action is in connection with the substitution of the liquidity support provided by Dexia Credit Local (Dexia, rated 'A+/F1+', Stable Outlook by Fitch) in the form of a Standby Bond Purchase Agreement (SBPA), with a substitute SBPA issued by JPMorgan Chase Bank, N.A. (JPM, rated 'AA-/F1+', Stable Outlook). The 'AAA' long-term rating assigned to the bonds continues to be based upon the rating assigned by Fitch to general obligation bonds of the State of Texas (see the Fitch press release dated May 11, 2011 available on www.fitchratings.com).
On the effective date, the short-term 'F1+' rating will be based on the liquidity support provided by JPM, in the form of a substitute SBPA. The substitute SBPA provides for the payment of the principal component of purchase price plus an amount equal to 187 days of interest calculated at a maximum rate of 15%, based on a year of 365 days for tendered bonds during the weekly rate mode, in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender.
The substitute SBPA will expire on July 3, 2014, the stated expiration date, unless such date is extended, upon conversion to a rate other than the weekly interest rate mode, or upon the occurrence of certain other events of default which result in a mandatory tender or other termination events related to the credit of the general obligation bonds of the State of Texas which result in an automatic and immediate termination. The short-term 'F1+' rating will expire on the expiration or prior termination of the SBPA. The short-term rating may be adjusted upward or downward in conjunction with the long-term rating of the bonds or the short-term rating of the bank. A mandatory tender of the bonds is scheduled to occur July 6, 2011, the SBPA substitution date. The remarketing agent for the bonds is Merrill Lynch Pierce Fenner & Smith.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'U.S. Municipal
Structured Finance Rating Criteria', April 25, 2011;
--'Rating
Guidelines for Variable-Rate Demand Obligations Issued with External
Liquidity Support', Feb. 28, 2011.
Applicable Criteria and Related Research:
U.S. Municipal Structured
Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=624129
Rating
Guidelines for Variable-Rate Demand Obligations Issued with External
Liquidity Support
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=607665
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