Fitch Rates $200MM NYC TFA Tax-Ex Sub. Bnds FY2015 A Subser A-3 & A-4 'AAA/F1'

NEW YORK--()--Fitch Ratings assigns a rating of 'AAA/F1', Stable Outlook to the City of New York Transitional Finance Authority (TFA) future tax secured tax-exempt subordinate bonds, fiscal 2015 series A $100,000,000 subseries A-3 and $100,000,000 subseries A-4 (adjustable-rate bonds).

KEY RATING DRIVERS:

The 'AAA' long-term rating and Stable Outlook is based on the credit quality of the TFA. The 'F1' short-term rating is based on the liquidity support in the form of two standby bond purchase agreements (SBPAs) provided by Mizuho Bank, Ltd., acting through its New York Branch (rated 'A-/F1', Stable Outlook).

The SBPAs are sized to cover the payment of the principal component of purchase price plus an amount equal to 35 days of interest calculated at a maximum rate of 9% based on a 365-day year which is sufficient for tendered bonds in the daily, weekly, and two-day rate mode in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following a mandatory or optional tender. Each SBPA will expire upon the earliest of: Aug. 1, 2017, the stated expiration date of the SBPA, unless such date is extended; conversion of all of the bonds of the subseries to an interest rate mode other than the daily, weekly or two-day rate mode; substitution of the SBPA; or upon the occurrence of certain other events of default which result in a mandatory tender or termination events related to the credit of TFA which result in an automatic and immediate termination. The short-term 'F1' ratings will expire on the expiration or prior termination of the SBPAs. The remarketing agents for the bonds are BNY Mellon Capital Markets, LLC for the A-3 bonds and Citigroup Global Markets Inc. for the A-4 bonds. The bonds are expected to be delivered on or about Aug. 1, 2014.

The bonds will be issued in the daily rate mode, but may be converted to a weekly, two-day, commercial paper, index, term, stepped coupon, auction or fixed rate. While bonds bear interest in the daily, weekly and two-day modes, interest is paid on the first business day of each month, commencing Sept. 1, 2014. Holders of bonds bearing interest in the daily, weekly and two-day rate modes may tender their bonds for purchase with the requisite prior notice. The tender agent is obligated to make timely draws on the SBPAs to pay the purchase price in the event of insufficient remarketing proceeds, and in connection with the expiration or termination of the SBPAs, except in the case of the credit-related events permitting immediate termination or suspension of the SBPAs.

Funds drawn under the SBPAs are held uninvested and are free from any lien prior to that of the bondholders. Each subseries of bonds is subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon substitution, unless rating confirmation is delivered by all rating agencies then rating the bonds; (3) upon expiration or termination of the SBPA; and (4) following the receipt of written notice from the bank of an event of default under the SBPA, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.

Bond proceeds will be used to finance capital projects for the city. For more information on the long-term rating, see Fitch's press release dated July 11, 2014, available on Fitch's web site at 'www.fitchratings.com'.

RATING SENSITIVITIES:

The short-term rating reflects 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. The long-term rating is exclusively tied to the creditworthiness of the TFA 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 Rating 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:

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

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736618

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=841756

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Contacts

Fitch Ratings
Primary Analyst
Joseph Staffa, +1 212-908-0829
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Linda Friedman, +1 212-908-0727
Senior Director
or
Committee Chairperson
Trudy Zibit, +1 212-908-0689
Managing Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Joseph Staffa, +1 212-908-0829
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Linda Friedman, +1 212-908-0727
Senior Director
or
Committee Chairperson
Trudy Zibit, +1 212-908-0689
Managing Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com