NEW YORK--(BUSINESS WIRE)--On the effective date of Aug. 14, 2013, Fitch Ratings will upgrade the short-term rating to 'F1+' from 'F1' assigned to the Harris County, Texas (the County) general obligation commercial paper notes series B (notes). A maximum of $40,000,000 aggregate principal amount of authorized notes may be outstanding at any given time.
The rating action is in connection with the substitution of the current credit agreement provided by Bank of America, N.A. (rated 'A/F1' Stable Outlook) with a substitute credit agreement to be provided by State Street Bank and Trust Company (rated 'A+/F1+'; Positive Outlook).
KEY RATING DRIVERS
On the effective date, the 'F1+' rating on the series B notes will be based on the support of a credit agreement to be provided by State Street Bank and Trust Company. The substitute credit agreement covers principal only. The County remains obligated to pay interest upon maturity of all notes. For more information on the County's long and short-term ratings, see Fitch's release 'Fitch Rates Harris County, TX TANs 'F1+' & Affirms LT & ULT Bonds at 'AAA'; Outlook Stable' dated July 2, 2013, available on Fitch's website at 'www.fitchratings.com'. The Rating Outlook is Stable for the long-term rating.
The short-term rating on the notes will expire on the earlier of: (i) August 12, 2016, the expiration date of the substitute credit agreement, unless such date is extended; or (ii) upon any prior termination of the substitute credit agreement.
Deutsche Bank Trust Company Americas will continue as the Issuing and Paying Agent (IPA) for the notes, and as IPA, is directed to request an advance under the substitute credit agreement whenever proceeds of the sale of rollover notes are insufficient to pay maturing notes. The substitute credit agreement provides sufficient coverage for the principal amount of notes and the issuer is obligated to pay interest on the notes.
All notes will be issued at par with interest due at maturity. Following the occurrence of certain events of default under the credit agreement, State Street Bank may direct the IPA to immediately stop the issuance of any additional notes. In such event, the substitute credit agreement will expire after all the notes supported by such credit agreement mature and have been paid from funds drawn on the substitute credit agreement. In addition, the substitute credit agreement may be immediately terminated by State Street Bank upon the occurrence of specified termination events. The dealer for the notes continues to be Goldman, Sachs & Co.
The rating reflects the short-term rating that Fitch maintains on the substitute bank providing liquidity support and will be adjusted upward or downward in conjunction with changes to the short-term rating of the bank and in some cases, the long-term rating of the County.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'U.S. Municipal Structured Finance Criteria' (Feb. 27, 2013);
--'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support' (Jan. 31, 2013).