NEW YORK--(BUSINESS WIRE)--On the effective date of July 1, 2011, Fitch Ratings will confirm the short-term 'F1+' rating assigned to the $39,560,000 State of Texas Veteran's Housing Assistance Program series 2006E Taxable Refunding 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+'). 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 35 days of interest calculated at a maximum rate of 15%, based on a year of 360 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 1, 2011, the SBPA substitution date. The remarketing agent for the bonds is JPMorgan.
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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