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Rating Update:

MOODY'S AFFIRMS P-1 LETTER OF CREDIT BACKED RATING OF THE NORTH TEXAS TOLLWAY AUTHORITY SYSTEM, COMMERCIAL PAPER NOTES, SERIES A

Global Credit Research - 16 Dec 2010

$200 MILLION OF NOTES AFFECTED. LETTER OF CREDIT PROVIDED BY BANK OF AMERICA, N.A.

Fully Supported
TX

Opinion

NEW YORK, Dec 16, 2010 -- Moody's has affirmed the short-term rating of P-1 of the $200 million North Texas Tollway Authority (the Authority) System, Commercial Paper Notes, Series A (the Notes).

RATING RATIONALE

The affirmation is in connection with (i) the amendment and restatement of the Resolution (which includes a change in the lien on the tolls and other revenues of the System pledged to support the Notes to second tier from third tier); and (ii) the issuance of a new letter of credit provided by Bank of America (BofA or the Bank), N.A. to replace the existing letter of credit that was also provided by BofA , but with different terms and conditions. The aforementioned issuance and amendments are scheduled to be effective December 16, 2010.

The rating is based upon the direct pay letter of credit (LOC) provided by Bank of America, N.A., which is sized for full principal and interest of the Notes; the structural and legal protections of the transaction, which ensure timely payment of principal and interest to the Note holders; and Moody's evaluation of the credit quality of the bank issuing the LOC.

The Commercial Paper Notes

$200,000,000 of Notes is authorized pursuant to the Resolution. Deutsche Bank Trust Company Americas, the Issuing and Paying Agent, (the IPA) will authenticate and deliver Notes upon receipt of an issuance request from the Authority and the Notes will mature no later than 270 days from the date of its issuance - which may in no event be later than 5 days prior to the stated expiration date of the LOC . Additionally no Notes may be issued which will cause the principal and interest amount outstanding of the Notes to exceed the stated amount available under the LOC.

Bank of America Merrill Lynch and Morgan Stanley & Co. will act as dealers for the Notes.

The Irrevocable Letter of Credit

The LOC is sized to cover $200,000,000 in principal plus 270 days of interest at the maximum rate (10%) on the Notes. The Notes can be issued on an interest bearing basis only. Conforming draws for principal and interest received by the Bank by 12:30 p.m., New York City time, on a business day will be honored by the Bank by 3:30 p.m., New York City time, on the same business day.

The IPA will draw on the LOC to make all payments of principal and interest on the Notes when due at maturity. Drawings for payment of principal and interest of the Notes under the LOC will be automatically reinstated by the Bank upon the Bank's receipt of reimbursement funds. The Bank will be reimbursed for each draw under the LOC with proceeds from the sale of Notes or, if such are not available, with funds provided by the Authority.

The Notes are not subject to redemption or acceleration prior to maturity.

Reimbursement Agreement Defaults

If there is an event of default under the reimbursement agreement, the Bank may send: (i) a No-Issuance Notice to the IPA; (ii) a Final Drawing Notice; or (iii) send notice of an Event of Default. Upon receipt of (i) or (ii), the IPA shall cease issuing Notes. Following the IPA's receipt of the notice described in (i), the IPA shall continue to draw under the LOC, as needed, for amounts equal to the full principal and accrued interest to maturity of any Notes then outstanding as such Notes mature. Upon the IPA's receipt of the notice described in (ii), the IPA is directed to draw on the LOC for full payment of principal and interest that has accrued and will accrue on outstanding Notes.

Substitution

The Authority has the right to provide the IPA with a substitute LOC. The Authority shall not deliver a substitute LOC to the IPA unless it receives written evidence from Moody's stating that the rating on the Notes will be neither reduced nor withdrawn as the result of the delivery of the proposed substitute LOC.

Expiration/Termination of the Letter of Credit

The LOC provided by BofA will terminate upon the earliest of: (i) the date of the Bank's receipt of a certificate from the IPA stating that a substitute LOC has been obtained and gone into effect; (ii) the date of the Bank's receipt of a certificate from the IPA stating that no Notes remain outstanding and the IPA elects to terminate the LOC; (iii) the earlier of (a) the 15th day after the date the IPA receives a Final Drawing Notice and (b) the date on which a drawing resulting from the Final Drawing Notice is honored; or (iv) the stated expiration date, December 16, 2013.

What Could Change the Rating-Up

Not applicable.

What Could Change the Rating-Down

The rating on the Notes would be lowered if the short-term other senior obligation rating on the Bank was downgraded.

Key Contacts:

Dealers: Bank of America Merrill Lynch and Morgan Stanley & Co.

Issuing and Paying Agent: Deutsche Bank Trust Company Americas

Trustee: Wells Fargo Bank, N.A.

Methodology

The principal methodologies used in this rating were Moody's Rating Methodology for Letter of Credit Supported Transactions published in August 2005 and Moody's Rating Methodology for Letter of Credit Supported Municipal Commercial Paper Transactions published in December 2008.

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

Robert Azrin
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

MOODY'S AFFIRMS P-1 LETTER OF CREDIT BACKED RATING OF THE NORTH TEXAS TOLLWAY AUTHORITY SYSTEM, COMMERCIAL PAPER NOTES, SERIES A
No Related Data.

 

© 2014 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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