$75 MILLION OF DEBT AFFECTED. RATINGS BASED ON LETTER OF CREDIT PROVIDED BY BANK OF AMERICA, N.A.
Expected Sale Date
Direct Pay LOC
NEW YORK, Nov 12, 2010 -- Substitute Bank of America, N.A. for Citibank, N.A. in subheading and replace
Underwriter/Remarketing Agent with Bank of America Merrill Lynch from Roosevelt
& Cross and replace Trustee with Bank of New York Mellon Trust Company,
N.A. from U.S. Bank National Association. Revised release follows.
Moody's Investors Service has assigned a rating of Aa3/VMIG 1 to the
Harris County Industrial Development Corporation Marine Terminal Revenue
Bonds (HFOTCO LLC Project) Series 2010 (the Bonds).
The rating is based upon (i) a direct-pay letter of credit provided by Bank of
America, N.A. (the Bank), (ii) the structure and legal protections of the
transaction, which ensure timely payment of debt service and purchase price to
bondholders; and (iii) Moody's evaluation of the credit quality of the bank
issuing the letter of credit.
Moody's currently rates the Bank Aa3 for its long-term obligations and P-1 for
its short-term obligations.
Interest Rate Modes and Payment
The Bonds will initially bear interest in a weekly rate mode. The trust
indenture permits conversion of the Bonds, in whole to the daily rate,
commercial paper rate, weekly R-FLOATS rate, Monthly R-FLOATS rate, Special
R-FLOATS rate, term rate, Indexed Mode and stepped coupon mode. Interest will be
paid on the first business day of each month while the Bonds bear interest in
the weekly rate mode and daily rate mode. Bonds will be subject to mandatory
tender at a price of par plus accrued interest upon conversion. Moody's letter
of credit backed rating on the Bonds applies only to Bonds bearing interest in
the weekly rate mode and daily rate mode.
The indenture does not permit the issuance of additional bonds.
Flow of Funds
The trustee is instructed to draw on the letter of credit for principal and
interest in accordance with its terms to make full and timely payments of
principal and interest, on the Bonds. The trustee is also instructed to draw on
the letter of credit in accordance with its terms for purchase price to the
extent that remarketing proceeds are insufficient in on each purchase date.
Bonds that are purchased by the Bank due to a failed remarketing are held by the
trustee and will not be released until the trustee has received written
confirmation from the Bank stating that the letter of credit has been reinstated
in an amount equal to such Bank Bonds.
Direct Pay Letter Of Credit
The letter of credit provided by the Bank is sized for the full principal amount
plus 55 days of interest at a rate of 10%, the maximum rate on the Bonds. The
letter of credit provides sufficient coverage for the Bonds while they bear
interest in the weekly or daily rate modes. The letter of credit is governed by
and construed in accordance with the International Standby Practices 1998,
International Chamber of Commerce Publication No. 590 (ISP98).
Draws On the Letter Of Credit
Conforming draws for principal, interest received by the Bank by 4:00 p.m.,
Eastern Time (ET), on a business day will be honored by 2:30 p.m., ET, on the
next business day. Conforming draws for purchase price received by the Bank by
12:00 p.m., Eastern Time (ET), on a business day will be honored by 2:00
p.m., ET, on the same business day.
Reinstatement of Interest Draws
Draws made under the letter of credit for interest shall be
automatically reinstated effective 12:00 noon (ET) on the eleventh (11)
calendar day following the date on which the Bank honor's an interest
drawing unless the trustee receives written notice prior to 5:00 pm ET on the
tenth (10) calendar day from the Bank that the an event of default has occurred
and requesting acceleration of the Bonds.
Reimbursement Agreement Defaults
Pursuant to the Indenture, the Bank may, at its option, deliver written notice
to the trustee stating that an event of default under the reimbursement
agreement has occurred and direct the trustee to cause a mandatory tender or
accelerate the Bonds. If directed to cause a mandatory tender of the Bonds, the
trustee shall cause a mandatory tender of the Bonds on the business day prior to
the date the letter of credit expires. If directed to accelerate the Bonds, the
trustee shall immediately declare the Bonds due and payable. Interest will cease
to accrue upon declaration of acceleration.
Events of Default Related to Payments in the Indenture
The Indenture contains events of default related to default in the payment of
the principal of or interest on any Bond or the purchase price of any Bond as
the same shall become due and payable. Upon the happening of such an event of
default, the trustee may, and at the request of at least 66 2/3% of bondholders
shall, declare the principal amount of all Bonds outstanding together with
accrued interest thereon to be immediately due and payable.
Expiration / Termination of the Letters Of Credit
The letter of credit expires upon the earliest of (i) November 17, 2013; (ii)
the earlier of (A) the date which is fifteen (15) days following the date on
which all of the Bonds bear interest at a rate other than the weekly or the
daily, or (B) the date on which the Bank honors a drawing under the letter of
credit on or after the conversion date; (iii) the date of receipt from the
trustee of a certificate stating that: (A) no bonds remain outstanding, (B) all
drawings have been honored, or (C) a substitute letter of credit has
been accepted by the trustee in accordance with the indenture, (iv) the date on
which an acceleration drawing or stated maturity drawing is honored by the Bank;
and (v) the date which is fifteen (15) days following receipt by the trustee of
a written notice from the Bank specifying the occurrence of an event of default
under the amended and restated credit agreement and either (a) requesting
acceleration of the Bonds or (b) requesting that the Bonds be subject to
mandatory tender for purchase on the Business Day preceding the date which is
fifteen (15) days following the trustee's receipt of such notice.
Substitution of the letter of credit is permitted. The Bonds are subject to
mandatory tender on the substitution date. The trustee shall not surrender the
existing letter of credit for cancellation until all required draws have been
honored. The existing letter of credit expires when it is surrendered to the
bank for cancellation.
Bondholders may optionally tender their Bonds, while the Bonds are in the weekly
rate mode, on any business day by providing written notice to the trustee at
least five (5) business days prior to the purchase date. Bondholders may also
optionally tender their Bonds, while the Bonds are in the daily rate mode, on
any business day by providing notice to the trustee prior to 11:00 am ET on the
purchase date. Bonds so tendered will be purchased from their bondholders on the
tender date at a purchase price of par plus interest accrued to the tender date.
The Bonds are subject to mandatory tender on (i) on each conversion date, (ii)
on the substitution date, (iii) at the direction of the Bank, as a result of the
occurrence of an event of default under the reimbursement agree, and (iv) two
business days prior to the expiration date of the letter of credit.
The Bonds are subject to mandatory sinking fund redemptions.
What Could Change the Rating-Up
Long-Term: The long-term rating on the Bonds would be raised if the long-term
other senior obligation (OSO) rating on the Bank was upgraded.
Short-Term: Not applicable.
What Could Change the Rating-Down
Long-Term: The long-term rating on the Bonds would be lowered if the long-term
OSO rating on the Bank was downgraded.
Short-Term: The short-term rating on the Bonds would be lowered if the
short-term OSO rating on the Bank was downgraded.
Trustee: Bank of New York Mellon Trust Company, N.A.
Underwriter/Remarketing Agent: Bank of America Merrill Lynch
The principal methodology used in rating this issue was Moody's Rating
Methodology for Letter of Credit Supported Transactions rating methodology
published in August 2005. Other methodologies and factors that may have been
considered in the process of rating this issue can also be found on Moody's
Information sources used to prepare the credit rating are the following: parties
involved in the ratings and public information
Moody's Investors Service considers the quality of information available on the
issuer or obligation satisfactory for the purposes of assigning a credit rating.
Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.
Public Finance Group
Moody's Investors Service
David A. Parsons
Senior Credit Officer
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
CORRECTION TO SUBHEADING, NOVEMBER 9, 2010 RELEASE: MOODY'S ASSIGNS Aa3/VMIG 1 LETTER OF CREDIT-BACKED RATING TO HARRIS COUNTY INDUSTRIAL DEVELOPMENT CORPORATION MARINE TERMINAL REVENUE BONDS (HFOTCO LLC PROJECT) SERIES 2010
Moody's Investors Service
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