Fitch to Upgrade S-T Rating to 'F1+' on Houston Airport Sys Sr Lien CP Notes Ser A & B

NEW YORK--()--On the effective date of Dec. 18, 2013, Fitch Ratings will upgrade the short-term rating to 'F1+' from 'F1' assigned to the $150,000,000 City of Houston, Texas airport system lien commercial paper notes, series A and B (notes). A maximum of $150,000,000 aggregate principal amount of authorized notes may be outstanding at any given time.

The rating action is in connection with (i) the substitution of the current irrevocable direct-pay letter of credit (LOC) provided by Bank of America, N.A. (rated 'A/F1', Stable Outlook) with a LOC to be provided by Royal Bank of Canada (RBC; rated 'AA/F1+', Stable Outlook); and (ii) the reoffering of the notes.

KEY RATING DRIVERS:

On the effective date, the short-term rating on the series A and series B notes will be upgraded to 'F1+' based on the support provided by an irrevocable direct-pay letter of credit (LOC) to be provided by RBC. The RBC substitute LOC provides coverage for the principal amount of the notes and interest on the maturity dates of the notes.

The short-term rating on the notes will expire on the earlier of Dec. 18, 2016, the expiration date of the substitute LOC, unless such date is extended, or upon any prior termination of the substitute LOC.

U.S. Bank Trust National Association, acting as Issuing and Paying Agent, (IPA), will continue as the IPA for the note holders. The IPA is directed to request an advance under the LOC to pay principal and interest on maturing notes. The substitute LOC provides sufficient coverage for the principal amount of notes and 270 days of interest calculated at 10% based upon a 365 day year.

All notes will be issued at par, with interest due at maturity. Following the occurrence of an event of default under the LOC, RBC may direct the IPA to immediately stop the issuance of any additional notes. Also, RBC may direct a final drawing notice with direction for the IPA to draw in full under the LOC. In such event, the substitute LOC will expire after all the notes supported by such LOC mature and have been paid from funds drawn on the substitute LOC. The dealers for the notes are J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Rice Financial Products Company and Loop Capital Markets LLC.

RATING SENSITIVITIES:

The rating is exclusively tied to the short-term rating that Fitch maintains on the substitute bank providing the LOC and will reflect all changes to that 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 Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support', Jan. 31, 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 Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=699392

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