Fitch to Affirm S-T Rating on Mass DOT Metro Highway System Sub Bonds Ser 2010A-1 at 'F1+'
OREANDA-NEWS. On the effective date of April 5, 2016, Fitch Ratings will affirm the 'F1+' Short-term rating assigned to the $43,625,000 Massachusetts Department of Transportation metropolitan highway system bonds (subordinated), commonwealth contract assistance secured, variable rate demand obligations 2010 series A-1. The short-term rating action is in connection with: (i) the substitution of the liquidity support provided by The Bank of New York Mellon ('BNY', rated 'AA/F1+'/Stable Outlook) in the form of a Standby Bond Purchase Agreement (SBPA), with a substitute SBPA to be issued by TD Bank, N.A. (rated 'AA-/F1+'/Stable Outlook); and (ii) the mandatory tender of the bonds, which will occur on April 5, 2016.
KEY RATING DRIVERS
On the effective date, the Short-term 'F1+' rating will be based on the liquidity support provided by TD Bank, N.A., in the form of a substitute SBPA, which has a stated expiration date of April 12, 2019, unless extended or earlier terminated, during the weekly interest rate mode only. The long-term 'AA' rating continues to be based on the rating assigned to the bonds. The Rating Outlook is Stable for the long-term rating. For more information on the long-term rating, see the press release dated April 28, 2015, available 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 187 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the weekly rate mode 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 April 1, 2019, the stated expiration date, unless such date is extended; upon conversion to a daily, bond interest term, index rate period or long-term interest rate mode; 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 the bonds which result in an automatic and immediate termination. A mandatory tender of the bonds is scheduled to occur on the SBPA substitution date, March 31, 2016. The remarketing agent for the bonds is TD Securities (USA) LLC.
RATING SENSITIVITIES
The short-term rating reflects 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. The long-term rating is exclusively tied to the creditworthiness of the bonds and will reflect all changes to that rating.basis.
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