Fitch To Downgrade Metro Washington Airport Auth's VR Ref Bonds Ser. 2010C L-T Rating to 'AA-'
--Long-term Rating downgraded to 'AA-' from 'AA+';
--Short-term Rating affirmed at 'F1'.
The Rating Outlook for the long-term rating is Stable.
The rating action is in connection with: (i) the substitution of the irrevocable direct-pay letter of credit (LOC) previously provided by Barclays Bank PLC (rated 'A/F1'; Stable Outlook) with a substitute LOC to be issued by Sumitomo Mitsui Banking Corporation (rated 'A-/F1'; Stable Outlook); and (ii) the mandatory tender of the bonds, which will occur on Sept. 22, 2015.
KEY RATING DRIVERS
The Long-term 'AA-' rating will be based on the higher of the underlying long-term rating assigned to the bonds by Fitch (currently rated 'AA-'), and the long-term rating assigned by Fitch to Sumitomo Mitsui Banking Corporation (rated 'A-'), the bank providing the irrevocable direct-pay letter of credit (LOC) securing the bonds, which has an initial stated expiration date of Sept. 21, 2020, unless extended or earlier terminated, during the daily, two-day, and weekly interest rate modes only. The Short-term 'F1' rating will be based solely on the LOC. For information about the underlying credit rating see report dated June 18, 2015 available at 'www.fitchratings.com'.
Pursuant to the substitute LOC, the bank is obligated to make regularly scheduled payments of principal of and interest on the bonds in addition to payments due upon maturity and redemption, as well as purchase price for tendered bonds. The Sumitomo Mitsui Banking Corporation LOC provides full and sufficient coverage of principal plus an amount equal to 48 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the daily, two-day, and weekly rate modes. The Remarketing Agent for the bonds is Barclays Capital.
RATING SENSITIVITIES
The Long-term rating is tied to the Fitch long-term rating assigned to the bonds and the long-term rating that Fitch maintains on the substitute bank providing the LOC. Changes to one or both of these ratings may affect the long-term rating assigned to the bonds.
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