Fitch Rates NYSHFA (Riverside Center 2) Hsg Rev Bonds, 2013 Series A-2&A-3 'A/F1'

NEW YORK--()--Fitch Ratings assigns a rating of 'A/F1', Stable Outlook to the $57,000,000 New York State Housing Finance Agency (NYSHFA) Riverside Center 2 housing revenue bonds, 2013 series A-2 and $65,800,000 2013 series A-3 (the bonds).

KEY RATING DRIVERS:

The rating is based on the support provided by an irrevocable direct-pay letter of credit (LOC) issued by Bank of America, N.A. (rated 'A/F1', Stable Outlook).

The LOC may be drawn upon up to a total principal amount of $275,000,000 for the following NYSHFA Riverside Center 2 housing revenue bonds: $25,000,000 2012 series A bonds issued in December 2012; $41,200,000 2013 series A-1 bonds issued in June 2013; the current issuances of $57,000,000 2013 series A-2 and $65,800,000 2013 series A-3 bonds; and the anticipated issuance of 2014 series A-1 and A-2 bonds.

The bank is obligated to make regularly scheduled payments of principal of and interest on the bonds in addition to payments due upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The rating will expire upon the earliest of: (a) Dec. 16, 2016, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion of the bonds to an interest rate mode other than the weekly rate mode; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 34 days of interest for each series of bonds at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the weekly rate mode. The bonds are expected to be delivered on or about Dec. 11, 2013. The Remarketing Agent for the 2013 series A-2 bonds is Loop Capital Markets LLC and the remarketing agent for the 2013 series A-3 bonds is Goldman, Sachs & Co.

The bonds initially bear interest at a weekly rate, but may be converted to a daily rate, an adjustable rate, a fixed rate, or a direct placement mode. While bonds bear interest in the weekly rate mode, interest payments are on the first business day of each month, commencing Jan. 2, 2014. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held invested in U.S. government obligations and repurchase agreements limited to such obligations, and are free from any lien prior to that of the bondholders.

Holders may tender their bonds on any business day, provided the trustee and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon expiration, substitution or termination of the LOC; and (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement and directing a mandatory tender. The bonds may also be redeemed following the trustee's receipt of a notice of an event of default under the reimbursement agreement with direction to have a mandatory redemption. The bonds may be redeemed upon the trustee's receipt of a notice of non-reinstatement of the LOC interest, however this LOC provides for automatic and immediate reinstatement of interest draws. Optional and mandatory redemption provisions also apply to the bonds. Additional bonds may be issued pursuant to a separate series resolution.

Bond proceeds will be used to: (a) fund an additional portion of a mortgage loan to finance a portion of the costs of constructing and equipping a multi-family rental housing development known as Riverside Center 2; (b) pay capitalized interest; and (c) pay costs of issuance.

RATING SENSITIVITIES:

The rating is tied exclusively to the short- and long-term rating that Fitch maintains on the bank providing the LOC and will reflect all changes to the rating.

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 Letter of Credit-Supported Bonds', June 14, 2013.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701570

Rating Guidelines for Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=710476

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=810573

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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Kasia Reed
Analytical Consultant
+1-212-908-0500
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Richard Park
Director
+1-212-908-0289
or
Committee Chairperson
Linda Friedman
Senior Director
+1-212-908-0727
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Kasia Reed
Analytical Consultant
+1-212-908-0500
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Richard Park
Director
+1-212-908-0289
or
Committee Chairperson
Linda Friedman
Senior Director
+1-212-908-0727
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com