Fitch Rates $1.7B North Carolina Eastern Muni Power Agency Refunded Bonds 'AAApre'

OREANDA-NEWS. Fitch Ratings assigns a rating of 'AAApre' to the $1,721,650,000 North Carolina Municipal Eastern Municipal Power Agency Power System Revenue Bonds, consisting of: $28,755,000 series 1991A, due Jan. 1, 2018; $333,545,000 refunding series 1993B, due Jan. 1, 2018-Jan. 1, 2026; $4,195,000 refunding series 2003E (Federally Taxable), due Jan. 1, 2026; $124,235,000 refunding series 2005A due Jan. 1, 2016-Jan. 1, 2021; $278,800,000 refunding series 2008A, due Jan. 1, 2016-Jan. 1, 2024; $39,765,000 refunding series 2008B (Federally Taxable), due Jan. 1, 2017 and Jan. 1, 2024; $28,185,000 series 2008C, due Jan. 1, 2019 and Jan. 1, 2024; $48,865,000 series 2009A, due Jan 1, 2016-Jan. 1, 2026; $351,840,000 refunding series 2009B, due Jan. 1, 2016-Jan. 1, 2026; $2,860,000 refunding series 2009C (Federally Taxable), due Jan. 1, 2023; $12,330,000 series 2009D, due Jan. 1, 2016-Jan. 1, 2026; $101,075,000 refunding series 2010A, due Jan 1, 2016-Jan. 1, 2023; $73,765,000 series 2012A, due Jan. 1, 2016-Jan. 1, 2026; $152,635,000 refunding series 2012B, due Jan. 1, 2016-Jan. 1, 2021; $29,020,000 series 2012C (Federally Taxable), due Jan. 1, 2017; and $111,780,000 refunding series 2012D, due Jan. 1, 2016-Jan. 1, 2026. The Rating Outlook is Stable.

The redeemable refunded bonds will be redeemed at par plus accrued interest, as follows: refunding series 2005A on Jan. 1, 2016; refunding series 2008A on Jan. 1, 2018; series 2008C on Jan. 1, 2019; series 2009A, 2009B and 2009D on Jan. 1, 2019; refunding series 2010A on Jan. 1, 2021; and series 2012A and refunding series 2012D on July 1, 2022. All other refunded bonds will be escrowed to maturity.

KEY RATING DRIVERS:

The 'AAApre'; Stable Outlook rating is based on the pledge of securities in the irrevocable trust fund securing the bonds and reflects the express lien of the refunded bondholders on the funds and securities deposited irrevocably and that all amounts have been invested in direct non-callable obligations of the United States and direct non-callable senior unsubordinated obligations of Fannie Mae (FNMA) and Freddie Mac (FHLMC). The U.S. full faith and credit is currently rated 'AAA', Stable Outlook by Fitch. As the ratings of FNMA and FHLMC are currently linked to the U.S. sovereign rating, any rating action on the U.S. sovereign rating will directly affect the rating on the bonds. Should Fitch's view of the strength of government support for FNMA/FHLMC be reduced or downgraded, the rating of FNMA/FHLMC may be delinked from the U.S. sovereign rating and may result in negative pressure on the rating of the bond series supported by those securities.

The bonds were refunded on July 31, 2015 with the proceeds of the issuer's $421,430,000 revenue bonds, series 2015 (Federally Taxable), proceeds of asset sales amounts received from Duke Energy Progress, Inc. pursuant to an asset purchase agreement, reserve funds previously securing the refunded bonds and other funds of the issuer. The ratings apply to the bonds listed by CUSIP number, below.

Pursuant to the irrevocable escrow deposit agreement, U.S. Bank National Association (rated 'AA-/F1+', Stable Outlook), as trustee, holds a separate special irrevocable trust fund, in trust for the benefit of the refunded bondholders. All cash and securities held in this fund is pledged irrevocably to the payment of principal and interest on the refunded bonds when due, at maturity or earlier redemption. In the future, Fitch will review any proposed substitution or reinvestment of funds, which may only occur following receipt of confirmation that the action will not result in a reduction or withdrawal of the ratings on the related refunded bonds.

Causey Demgen & Moore PC verified the mathematical accuracy of computations relating to the adequacy of cash and securities deposited in the escrow fund to pay debt service requirements of the refunded bonds. In the opinion of Causey Demgen & Moore, cash and securities deposited in the escrow deposit fund will produce amounts necessary to provide for timely payment of the related refunded bonds. Prior to accepting substitute investment securities or disbursing funds, the trustee must receive a new report verifying the continued sufficiency of escrowed funds to meet all future payments of principal and interest on the refunded bonds.

RATING SENSITIVITIES
The rating is currently tied to the U.S. sovereign creditworthiness and will reflect all changes to that rating. Should Fitch's view of the strength of government support for FNMA/FHLMC be reduced or downgraded, the rating of FNMA/FHLMC may be delinked from the U.S. sovereign rating and may result in negative pressure on the rating of the bond series supported by those securities.

The 'AAApre' rating applies to the bonds with the following CUSIP numbers:

658196QV5
658196QD5
658196PP9
658196PR5
658196PS3
658196PK0
658196H94
658196N71
658196N89
658196N97
658196P20
658196P38
658196P46
658196P53
658196P61
658196S50
658196S68
658196S76
658196S84
658196S92
658196T26
658196T34
658196T42
658196U24
658196U32
658196V98
658196W22
658196Y20
658196Y38
658196Y46
658196Y53
658196Y61
658196Y79
658196Y87
658196Y95
658196Z29
658196Z94
6581962A7
6581962B5
6581962C3
6581962D1
6581962E9
6581962F6
6581962G4
6581962H2
6581962J8
6581962K5
6581962M1
6581962L3
6581962U3
6581963A6
6581963B4
6581963C2
6581963D0
6581963E8
6581963F5
6581963G3
6581963H1
6581963K4
6581963P3
6581963L2
6581963Q1
6581963M0
6581964F4
6581964G2
6581964S6
6581964H0
6581964T4
6581964J6
6581964U1
6581964K3
6581964V9
6581964L1
6581964W7
6581964M9
6581964N7
6581964P2
6581964Q0
6581964X5
6581964R8
6581964Z0
6581965A4
6581965B2
6581965C0
6581965D8
6581964B3
6581965G1
6581965H9
6581965J5
6581965K2
6581965L0