OREANDA-NEWS. November 11, 2015.  Fitch Ratings has assigned an 'F1+' rating to the District of Columbia's (the District) \\$250 million fiscal 2016 general obligation (GO) tax revenue anticipation notes (TRANs).

The TRANs are scheduled to be offered competitively during the week of December 2 and will mature on Sept. 30, 2016.

SECURITY

The TRANS are general obligations of the District, with its full faith and credit pledged.

KEY RATING DRIVERS

GO PLEDGE OF DISTRICT: The TRANs are GOs of the District, payable from any source of receipts not otherwise legally committed.

GENERAL DISTRICT CREDIT FACTORS: The District's GOs are rated 'AA' by Fitch, reflecting strong financial management practices, including sound reserve levels and timely actions to maintain budgetary balance, and a broad and diverse array of tax revenues. The rating also incorporates the District's high debt ratios, which are expected to remain elevated, as well as economic and revenue challenges due to reliance on the federal government at a time of federal deficit reduction. DC's significant exposure to the federal government is a credit concern, but Fitch anticipates continued overall economic stability and timely budgetary action to address any shortfalls.

SATISFACTORY COVERAGE BY PROJECTED CASH FLOWS: Projected cash flow provides satisfactory coverage of note repayment, and balances in various reserve funds provide substantial additional cushion. Revenue performance is monitored to ensure necessary funds are available for repayment. Importantly, the District is authorized to request a U.S. Treasury advance if necessary to repay TRANs.

RATING SENSITIVITIES
FUNDAMENTAL CREDIT CHARACTERISTICS: The rating is sensitive to the District of Columbia's general credit quality (general obligation bonds rated 'AA' with a Stable Outlook), and continued strength of cashflow coverage.

CREDIT PROFILE
The District of Columbia is a regular TRANs issuer, in part to manage cash flow trends tied to receipt of property taxes in the second half of the fiscal year. Most sources of receipts are spread fairly evenly throughout the year, but property taxes, which typically make up one fifth of fiscal year receipts, are received in March, April, and September. DC's fiscal year ends on Sept. 30. The 'F1+' rating reflects satisfactory coverage of note repayment on the payment date, sound legal provisions, and available borrowable reserves. The rating also considers the District's sound financial management.

The \\$250 million in note proceeds represents 2.2% of projected fiscal 2016 cash receipts in the District's operating accounts, which include the general, capital projects, and federal and private resources funds. The size of the borrowing is down slightly from the \\$400 million issued last year, reflecting DC's improved cash position. Coverage of principal and interest at maturity by projected general fund and reserve cash balances is expected to be sound at 6.4x. The cash flow forecast projects an ending cash balance of \\$780 million in the operating funds and \\$846.1 million in additional reserves after note repayment, including federally required reserves and District designated reserves. Combined, these resources equal a strong 14.5% of fiscal 2016 anticipated cash receipts.

The TRANs are GOs of the District, payable from any source of receipts not otherwise legally committed. Thus, the TRANs do not benefit from the security of the special real property tax that is set aside for repayment of GO bonds, and the District's income tax secured revenue bonds have a superior lien on dedicated personal income and business franchise tax revenues. The District is required to deposit funds for TRAN repayment in an escrow fund on three dates in September, prior to the September 30 maturity: 20% of principal on Sept. 1, 2016, 60% of principal on Sept. 21, 2016, and the remaining 20% of principal plus 100% of accrued interest on Sept. 29, 2016.

The TRANs Act and the escrow agreement require the chief financial officer (CFO) to review monthly cash flow projections before Aug. 16, 2015 and Sept. 16, 2015. If the CFO determines that TRANs principal and interest will equal or exceed 85% of estimated amounts to be received after such dates but before the repayment date, the CFO is required to deposit into the escrow account receipts received by the District that are not otherwise legally committed until the amount on deposit in the TRANs escrow account equals at least 100% of the repayment amount. If sufficient funds are not available in the escrow account by the final required deposit date noted above (Sept. 29, 2015), the CFO must deposit the amount required for repayment from all legally available funds on that same date (one business day before final maturity of the notes). Further, the District may seek a U.S. Treasury advance if necessary to cover TRANs debt service.

Fiscal 2015 cash flow performance exceeded expectations with expenses coming in below the forecast. Tax revenue growth was ahead of the projection made at the time of the fiscal 2015 note sale with property and individual income tax revenue leading the way. The District's capital spending came in below the projection and DC anticipates continued moderation in the pace of capital spending following several years of heavy expenditures. The District estimates its ending fiscal 2015 cash balance at September 30 was \\$1.3 billion with an additional \\$846.1 million in reserves, versus balances of \\$645.5 million and \\$720.8 million projected at the time of last year's TRANS issuance.

For additional information, please see Fitch's report on the District, ('District of Columbia') dated June 4, 2015, and available at 'www.fitchratings.com'.