OREANDA-NEWS. Fitch Ratings has assigned an 'AA' rating to bank bonds corresponding to the following subseries of Metropolitan Transportation Authority (MTA) dedicated tax fund (DTF) bonds:

--$150,000,000 DTF, variable rate bonds, subseries 2002B-1.

The ratings have been assigned in conjunction with the expected substitution, on March 23, 2016, of the series' existing letter of credit with a substitute letter of credit with the Bank of Tokyo-Mitsubishi UFJ, Ltd., acting through its New York Branch.

Based on a review of the terms governing the bank bonds, 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 of the DTF bonds.

The Rating Outlook is Stable.

SECURITY

The bonds are special obligations payable from state taxes deposited in the pledged amounts account including dedicated mass transportation trust fund (MTTF) receipts and metropolitan mass transportation operating assistance account (MMTOA) receipts. Tax revenues allocated to the DTF are subject to annual appropriation by the state legislature

KEY RATING DRIVERS

LINK TO STATE CREDIT QUALITY: Tax revenues allocated to the DTF are provided by annual appropriations of the state legislature, and the state has discretion regarding revenues flowing to the fund. The state has a track record of providing a reliable revenue stream to the DTF.

STRATEGIC IMPORTANCE: The MTA transportation network is essential to the economy of New York State, with New York City Transit (NYCT) carrying an average of 8.1 million daily subway and bus riders and Metro-North Railroad (MNR) and Long Island Rail Road (LIRR) carrying another 588,000 daily commuter rail passengers.

INSULATION FROM MTA OPERATIONS: The security for the dedicated tax bonds is insulated from the highly constrained financial operations of the MTA, although excess DTF revenues after debt service obligations are met are needed to support transit and commuter operations.

SOLID DEDICATED TAX STREAM: The dedicated taxes are diverse and derived from a broad, wealthy state and regional economy, although revenues are sensitive to economic cycles.

AMPLE COVERAGE: Dedicated revenues provide ample coverage of maximum annual debt service (MADS), and there is a strong incentive to limit leveraging of the DTF given the demands on surplus revenues for operating support of transit and commuter rail.

RATING SENSITIVITIES

STATE GENERAL OBLIGATION CREDIT QUALITY: The rating is sensitive to the credit quality of New York State, to which it is linked.

CONTINUATION OF STATE COMMITMENT: Evidence that New York State's historical commitment to providing a generally reliable revenue stream to the dedicated tax fund is materially reduced could result in a downgrade.

CREDIT PROFILE

The 'AA' rating on MTA's DTF bonds is based on the state's long history of support for the MTA generally and for the DTF bonds in particular. Fitch rates the bonds one-notch below New York State's 'AA+' general obligation rating, on par with other appropriation debt of the state.

Underlying the 'AA' rating is the expectation that the record of state support of the fund will continue going forward and the expectation that DTF borrowing will remain at a level that allows for substantial excess resources to flow to the MTA to support transit and commuter rail operations.