OREANDA-NEWS. On the effective date of Oct. 8, 2015, Fitch Ratings will affirm the 'F1+' short-term rating assigned to the New York City Municipal Water Finance Authority Water and Sewer System second general resolution revenue bonds, adjustable rate fiscal 2006 subseries AA-1A and subseries AA-1B (the bonds).

The rating action is in connection with extension of the existing liquidity facility currently provided by State Street Bank and Trust Company (State Street, rated 'AA/F1+', Stable Outlook) for the subseries AA-1A bonds and the substitution of the liquidity facility currently provided by California State Teacher's Retirement System (CaLSTRS rated 'AA+/F1+', Stable Outlook) for the subseries AA-1B bonds in the form of a SBPA to be provided by State Street for both series of bonds.

KEY RATING DRIVERS

On the effective date, the short-term 'F1+' rating assigned to the series 2006 subseries AA-1 and AA-1B bonds will be based on the liquidity support provided State Street in the form of a substitute SBPA, which has a stated expiration date of Oct. 7, 2020, unless extended or earlier terminated, during the daily rate, two-day rate and the weekly rate modes. The long-term 'AA+', Stable Outlook rating currently assigned to the bonds continues to be based on the rating assigned by Fitch to the water and sewer system second general resolution (SGR) revenue bonds for the New York City Municipal Water Finance Authority. For more information on the long-term rating of New York City Municipal Water Finance Authority, see the press release dated May 15, 2015 on Fitch's website at www.fitchratings.com.

The substitute SBPA provides for the payment of the principal component of purchase price plus an amount equal to 35 days of interest at the maximum rate of 9%, based on a year of 365 days for tendered bonds during the daily rate, two-day rate and weekly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The substitute SBPA will expire on Oct. 7, 2020, unless such date is extended, upon conversion to a mode to other than a daily rate, two-day rate and weekly rate modes or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of New York City Municipal Water Finance Authority which result in an automatic and immediate termination. The remarketing agent for the bonds is Goldman, Sachs & Co.

RATING SENSITIVITIES
The short-term ratings reflect 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.