Fitch Takes Various Rating Actions on Muni Improvement Corp of Los Angeles, CA Lease Rev CP Notes

NEW YORK--()--Fitch Ratings has affirmed the following Municipal Improvement Corporation of Los Angeles, CA (the corporation) lease revenue commercial paper (CP) notes:

--Tax-exempt series A-3 and taxable series B-3 at 'F1';

--Tax-exempt series A-4 and taxable series B-4 at 'F1+'.

The affirmation of the ratings is in connection with the re-issuance of letters of credit (LOCs) and reimbursement agreements for series A-3 and B-3, and A-4 and B-4, effective June 14, 2016. As of the effective date, a maximum of $60,000,000 aggregate principal amount of authorized notes may be outstanding at any given time for series A-3 and B-3, and a maximum of $150,000,000 for series A-4 and B-4.

Fitch has also downgraded to 'F1' from 'F1+' the rating for the corporation's CP notes, tax-exempt series A-2 and taxable B-2, in connection with the substitution of the letter of credit. A maximum of $55,000,000 aggregate principal amount of authorized notes may be outstanding at any given time for series A-2 and B-2.

KEY RATING DRIVERS:

The 'F1' rating on the series A-3 and B-3 notes and the 'F1+' rating on the series A-4 and B-4 notes is based on the Bank of the West ('A/F1', Stable Outlook) and U.S. Bank, N.A. ('AA/F1+', Stable Outlook) LOCs, respectively, which provide coverage for the principal amount of the CP notes plus interest payable at maturity for each respective series. The LOC for the series A-3 and B-3 notes will expire on June 30, 2019, and the LOC for the series A-4 and B-4 notes will expire on June 30, 2021, unless in each case such date is extended, or the respective LOC is earlier terminated.

The 'F1' rating for the series A-2 and B-2 notes is based on the support provided by an irrevocable direct-pay LOC issued by Bank of America, N.A. ('A+/F1', Stable Outlook) in substitution for the LOC currently provide by JPMorgan Chase Bank, National Association ('AA-/F1+'), Stable Outlook. The LOC on the series A-2 and B-2 notes will expire on June 30, 2019, unless such date is extended, or upon any prior termination of the LOC.

The 'F1+' rating currently assigned to the CP notes tax-exempt series A-1 and taxable series B-1 will continue to be based on the existing Wells Fargo Bank, National Association ('AA/F1+', Stable Outlook) LOC, which has been extended and will expire on June 30, 2019. A maximum of $130,000,000 aggregate principal amount of authorized notes may be outstanding at any given time for series A-1 and B-1.

As authorized under the Third Amended and Restated Issuing and Paying Agent Agreement, Wells Fargo Bank, National Association will continue as the Issuing and Paying Agent (IPA) for all four series of CP notes and is directed to request an advance under each respective LOC to pay principal and interest on maturing notes. Proceeds of the sale of rollover notes will be used to reimburse the bank. The IPA may not allow notes to be issued in an amount the principal (or face amount) of which, plus accrued interest thereon, exceeds the amount available under the LOC.

The tax-exempt series A-1, A-2, A-3 and A-4 CP notes will be issued at par with interest due at maturity. The taxable series B-1, B-2, B-3 and B-4 CP notes may be issued at par or at a discount. Following the occurrence of an event of default under each LOC, the respective bank may direct the IPA to immediately stop the issuance of any additional notes supported by such LOC. In such event, the respective LOC remains available to pay outstanding CP notes as they mature, and will expire only after all the notes supported by such LOC mature and have been paid from funds drawn on the LOC.

The dealers for the notes are: Merrill Lynch, Pierce, Fenner & Smith Incorporated; Samuel A. Ramirez & Co.; U.S. Bancorp Investments, Inc.; Wells Fargo Securities.

RATING SENSITIVITIES

The rating is exclusively tied to the short-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

Rating Criteria for Letter of Credit-Supported Bonds and Commercial Paper (pub. 05 Apr 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878782

U.S. Municipal Structured Finance Criteria (pub. 23 Feb 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1006017

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1006017

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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
Joseph Staffa
Senior Director
+1-212-908-0689
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Richard Park
Director
+1-212-908-0289
or
Committee Chairperson
Mario Civico
Senior Director
+1-212-908-0796
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Joseph Staffa
Senior Director
+1-212-908-0689
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Richard Park
Director
+1-212-908-0289
or
Committee Chairperson
Mario Civico
Senior Director
+1-212-908-0796
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com