Fitch Ratings assigns a rating of 'AA+/F1+' to the $205,965,000 unlimited tax general obligation refunding bonds (dedicated revenues), consisting of $48,910,000 series 2010A and $157,055,000 series 2010B. The long-term rating is determined using Fitch's dual-party pay criteria and is based jointly on the underlying rating assigned to those bonds by Fitch (currently rated 'A+'), and the support provided by the letter of credit (LOC) for each series issued by JPMorgan Chase Bank, National Association (JPM, rated 'AA-/F1+'). The short-term 'F1+' rating is based solely on each LOC. For information about the underlying credit rating see Fitch's press release dated Feb. 5, 2010 and 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 JPM and the obligor which results in a long-term rating of 'AA+' for the bonds. If either the underlying bond rating or JPM's 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 JPM's rating and the underlying bond rating.
JPM is obligated to make payments of principal of and interest on the bonds upon maturity and redemption, as well as purchase price for tendered bonds. The rating will expire upon the earliest of: (a) Feb. 17, 2013, the initial stated expiration date of a series LOC, unless such date is extended; (b) conversion to an interest rate mode other than a daily rate or weekly rate mode; (c) any prior termination of each LOC; and (d) defeasance of the bonds. Each LOC provides full and sufficient coverage of principal plus an amount equal to 45 days of interest at a maximum rate of 15% based on a year of 365 days and purchase price for tendered bonds, while the bonds bear interest in a daily or weekly rate mode. The Remarketing Agent for the bonds is J.P. Morgan Securities Inc. The bonds are expected to be delivered on or about Feb. 17, 2010.
The bonds initially bear interest at a daily rate, but may be converted to a weekly, flexible, term or fixed rate. While bonds bear interest in the daily rate mode, interest payments are on the first business day of each month, commencing March 1, 2010. The trustee is obligated to make timely draws on each LOC to pay principal, interest, and purchase price. Funds drawn under each LOC are invested in accordance with rating guidelines, maturing when needed, and are free from any lien prior to that of the bondholders.
Holders may tender their bonds on any business day, provided the trustee is given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) on interest rate mode conversion dates; (2) upon expiration, substitution or termination of a series LOC; (3) following receipt of written notice from JPM of an event of default under the reimbursement agreement; and (4) following receipt of notice from JPM that the interest component of a series LOC will not be reinstated and directing a mandatory tender Optional and mandatory redemption provisions also apply to the bonds. There are no provisions for the issuance of additional bonds under the indentures authorizing the bonds.
Bond proceeds will be used to refund the outstanding series 2004C-2 and series 2005D-2 bonds.
Applicable criteria available on Fitch's website at www.fitchratings.com: 'U.S. Municipal Structured Finance Rating Criteria', December 17, 2009; 'Rating Guidelines for Letter of Credit-Supported Bonds', April 29, 2009, 'Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds', June 11, 2009.
Additional information is available at www.fitchratings.com.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
Contacts:
Fitch Ratings
Mary Jane Ziga, +1-212-908-0529 (New York)
Melanie
Shaker, +1-312-368-3143
(information about the Chicago Board of
Education's unenhanced long-term rating, Chicago)
or
Cindy
Stoller, +1-212-908-0526
(Media Relations, New York)
cindy.stoller@fitchratings.com