Fitch to Take Various Rating Actions on Metro Washington Airport Auth Series 2009D Airport VRBs

NEW YORK--()--On the effective date of Dec. 18, 2012, Fitch Ratings will confirm the long-term 'AA+', Outlook Stable rating and upgrade the short-term rating to 'F1+' from 'F1' to the Metropolitan Washington Airport Authority airport system revenue variable rate bonds series 2009D consisting of subseries 2009D-1 and subseries 2009D-2 (the bonds).

The rating actions are in connection with the mandatory tender and substitution of the irrevocable direct-pay letter of credit (LOC) previously provided by Bank of America, N.A. (rated 'A/F1', Outlook Stable) with a substitute LOC to be issued by TD Bank, NA (rated 'AA-/F1+', Outlook Stable).

The long-term rating will continue to be determined using Fitch's dual-party pay criteria and will be based jointly on the underlying rating assigned to the bonds by Fitch (currently rated 'AA-', Outlook Stable), and the support provided by the substitute LOC. The short-term ratings will be based solely on the substitute LOC.

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 long term rating of 'AA+'. 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 bond would then be adjusted to the higher of the bank rating and the underlying bond rating.

Pursuant to the substitute LOC, the bank 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 ratings will expire upon the earliest of: (a) Dec. 2, 2017 the initial stated expiration date of the substitute LOC, unless such date is extended; (b) conversion to a rate mode other than weekly or daily interest rate; (c) any prior termination of the substitute LOC; and (d) defeasance of the bonds. The substitute LOC provides full and sufficient coverage of principal plus an amount equal to 48 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the weekly and daily rate modes. A mandatory tender of the bonds will occur on the substitution date of Dec. 18, 2012. The Remarketing Agent for the bonds is Merrill Lynch, Pierce, Fenner & Smith Incorporated.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:
--'U.S. Municipal Structured Finance Rating Criteria' (Feb. 28, 2012);
--'Rating Guidelines for Letter of Credit-Supported Bonds' (June 20, 2012);
--'Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds' (March 9, 2012).

Applicable Criteria and Related Research:
Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=673910
U.S. Municipal Structured Finance Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=672570
Rating Guidelines for Letter of Credit-Supported Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681737

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
Primary Analyst:
Mario Civico, +1-212-908-0796
Senior Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Joseph Staffa, +1-212-908-0829
Senior Director
or
Committee Chairperson:
Trudy Zibit, +1-212-908-0689
Managing Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst:
Mario Civico, +1-212-908-0796
Senior Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Joseph Staffa, +1-212-908-0829
Senior Director
or
Committee Chairperson:
Trudy Zibit, +1-212-908-0689
Managing Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com