Fitch to Downgrade S-T Rating on Wake County, NC., VR School Bonds, Series 07A & 07B to 'F1'

NEW YORK--()--On the effective date of March 25, 2014, Fitch Ratings will downgrade the short-term ratings assigned to the Wake County, North Carolina Variable Rate School Bonds (the Bonds), consisting of $50,000,000 Series 2007A and $50,000,000 Series 2007B to 'F1' from 'F1+'. The short-term rating action is in connection with the substitution of the liquidity support provided by Wells Fargo Bank, National Association (rated 'AA-/F1+'; Stable Outlook) in the form of two separate Standby Bond Purchase Agreements (SBPAs), with two separate substitute SBPAs to be issued by Mizuho Bank (Mizuho, rated, 'A-/F1'; Stable Outlook).

KEY RATING DRIVERS

On the effective date, the short-term 'F1' rating will be based on the liquidity support provided by Mizuho, in the form of two separate substitute SBPAs. The long-term 'AAA'; Stable Outlook rating assigned to the bonds continues to be based on the rating assigned by Fitch to general obligation bonds of Wake County, North Carolina.

For more information on the long-term rating, see the press release dated March 27, 2013 entitled 'Fitch Rates Wake County, NC's GOs 'AAA'; Outlook Stable' available on Fitch's website at www.fitchratings.com.

The substitute SBPAs provide for the payment of the principal component of purchase price plus an amount equal to 34 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the daily and weekly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. Each substitute SBPA will expire on the earliest of: March 24, 2017, the expiration date of the Mizuho substitute SBPAs, unless such date is extended; conversion to a mode other than a daily, or weekly rate mode; the occurrence of certain other events of default which result in a mandatory tender; or other termination events related to the credit of Wake County, North Carolina which result in an automatic and immediate termination of the SBPAs. The short-term 'F1' ratings will expire on the expiration or prior termination of the SBPAs.

On the effective date Merrill Lynch, Pierce Fenner & Smith, Incorporated will replace Wells Fargo Securities as remarketing agent for the bonds.

RATING SENSITIVITIES

The short-term ratings reflect the short-term rating that Fitch maintains on the bank providing liquidity support, and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bonds.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria' (Feb. 24, 2014);

--'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support' (Jan. 27, 2014).

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736618

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=730736

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
Linda Friedman, +1-212-908-0727
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Richard Park, +1-212-908-0289
Director
or
Committee Chairperson
Joseph Staffa, +1-212-908-0829
Senior Director
or
Media Relations, New York
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Linda Friedman, +1-212-908-0727
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Richard Park, +1-212-908-0289
Director
or
Committee Chairperson
Joseph Staffa, +1-212-908-0829
Senior Director
or
Media Relations, New York
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com