Fitch Rates New York City TFA's Bank Bonds 'AA+'; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns an 'AA+' rating to bank bonds corresponding to the following two series of New York City Transitional Finance Authority (TFA) bonds:

--Future tax secured bonds fiscal 2003 series C-5;

--New York City recovery bonds fiscal 2003 series B-2.

The ratings are being assigned in conjunction with the substitution of liquidity facilities on the bonds, expected later this month. Currently there are no bank bonds for either series. Based on a review of the terms governing bank bonds specified in the substitute standby bond purchase agreements, it is Fitch's opinion that the incremental risk associated with bank bonds does not have a material impact on the long-term credit rating.

The 'AA+' rating is based on the very high credit quality of the legal structure and the strength of the statutory revenues, which are personal income tax (PIT) revenues and, if projected debt service coverage from PIT revenues falls below 1.5 times (x), sales tax revenues. Revenues from the PIT flow directly from the state comptroller to the TFA; the city receives residual revenues only after TFA bondholders have been paid. Although statutory revenues dropped sharply in fiscal 2009 and are expected to decline further in fiscal 2010, coverage remains strong. Coverage of maximum annual debt service (MADS) based on fiscal 2009 revenues was 7.7x. A 0.5% increase in the sales tax rate that became effective on Aug. 1, 2009 boosts statutory revenues in the coming years. Although senior bonds have a first claim on statutory revenues, Fitch does not make a rating distinction between the liens due to the high coverage levels. The Rating Outlook is Stable.

For more information, see Fitch Research 'Fitch Rates New York City TFA's $800MM Bonds 'AA+'; Outlook Stable', dated Oct. 12, 2009.

Additional information is available at 'www.fitchratings.com'.

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.