Fitch to Revise L-T & Confirm S-T Ratings for Waco Ed Fin Corp VRDBs (Baylor Univ) Ser 2008A

NEW YORK--()--On the effective date of May 22, 2014, Fitch Ratings will (i) revise the Long-term rating to 'AA-' and (ii) confirm the Short-term rating at 'F1+' assigned to the $67,325,000 Waco Education Finance Corporation revenue refunding bonds (Baylor University Issue) Series 2008A. The Rating Outlook is Stable.

The rating actions are in connection with (i) the substitution of the standby bond purchase agreement (SBPA) provided by The Bank of New York Mellon (rated 'AA-/F1+'; Stable Outlook by Fitch) with an irrevocable direct-pay letter of credit (LOC) to be provided by The Bank of New York Mellon and (ii) the restructuring of the bond documents to support a LOC structure.

KEY RATING DRIVERS

The current long-term rating is the underlying long-term rating assigned to the bonds by Fitch. On the effective date, the revised long-term rating will be based on the support provided by a LOC issued by The Bank of New York Mellon. The current short-term rating is based on the standby bond purchase agreement provided by The Bank of New York Mellon. On the effective date, the short-term rating will be based solely on the support provided by the LOC issued by The Bank of New York Mellon.

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 that are not remarketed. The ratings will expire upon the earliest of: (a) May 22, 2017, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion to a rate other than the daily or weekly rate; (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 35 days of interest at a maximum rate of 10% based on a year of 365 days and purchase price for tendered bonds, while in the daily or weekly rate mode. The Remarketing Agent for the bonds is JPMorgan Securities.

The bonds will continue to bear interest at a weekly rate, but may be converted to a daily, monthly, money market, quarterly, semiannual, term or fixed interest rate modes. While bonds bear interest in the weekly rate mode, interest payments are on the first Wednesday of each month. The next scheduled interest payment date is June 4, 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 uninvested, and are free from any lien prior to that of the bondholders.

Holders may tender their bonds on any business day, provided the trustee agent and remarketing agent are given the requisite prior notice of the tender. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate mode; (2) upon expiration, substitution or termination of the substitute LOC; and (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement. Optional and mandatory redemption provisions also apply to the bonds. Additional bonds may be issued pursuant to a separate series under a supplemental indenture.

Bond proceeds were used to (i) refinance and refund all of the outstanding Refunded Bonds (Series 2002A, 2002B and 2006 bonds) and (ii) to pay swap termination fees.

RATING SENSITIVITIES

The rating is exclusively tied to the short and long-term rating that Fitch maintains on the 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. 24, 2014;

--'Rating Guidelines for Letter of Credit-Supported Bonds' (May 14, 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 Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748307

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.
33 Whitehall Street
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, New York
Elizabeth Fogerty, +1 212-908 0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Mario Civico
Senior Director
+1 212-908-0796
Fitch Ratings, Inc.
33 Whitehall Street
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, New York
Elizabeth Fogerty, +1 212-908 0526
elizabeth.fogerty@fitchratings.com