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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

12 Nov 2010

$75 MILLION OF DEBT AFFECTED. RATINGS BASED ON LETTER OF CREDIT PROVIDED BY BANK OF AMERICA, N.A.

HFOTCO LLC
Fully Supported
TX

Moody's Rating

ISSUE

RATING

Ser. 2010

Aa3/VMIG 1

  Sale Amount

$75,000,000

  Expected Sale Date

11/09/10

  Rating Description

Direct Pay LOC

 

Opinion

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).

RATINGS RATIONALE

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.

Additional Bonds

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

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.

Optional Tenders

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.

Mandatory Purchases

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.

Mandatory Redemption

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.

Key Contacts

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 website.

REGULATORY DISCLOSURES

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.

Analysts

Emily Korot
Analyst
Public Finance Group
Moody's Investors Service

David A. Parsons
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

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
No Related Data.
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