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MOODY'S ASSIGNS A1/VMIG 1 LETTER OF CREDIT-BACKED RATING TO THE NORTH TEXAS TOLLWAY AUTHORITY SYSTEM FIRST TIER VARIABLE RATE REVENUE REFUNDING BONDS, SERIES 2011A.

Global Credit Research - 14 Jun 2011

$100 MILLION OF DEBT AFFECTED. RATING BASED ON LETTER OF CREDIT PROVIDED BY MORGAN STANLEY BANK, NATIONAL ASSOCIATION.

Fully Supported
TX

Moody's Rating

ISSUE

RATING

Ser. 2011A

A1/VMIG 1

  Sale Amount

$100,000,000

  Expected Sale Date

06/30/11

  Rating Description

Direct-Pay LOC

 

Opinion

NEW YORK, Jun 14, 2011 -- Moody's Investors Service has assigned a rating of A1/VMIG 1 to the North Texas Tollway Authority System First Tier Variable Rate Revenue Refunding Bonds, Series 2011A (the "Bonds"). The proceeds are to be used to refund Series 2008J bonds.

RATINGS RATIONALE

Upon the issuance of the letter of credit the rating will be based upon: (i) the direct-pay letter of credit provided by Morgan Stanley Bank, 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 Morgan Stanley Bank, N.A.'s long-term and short-term other senior obligations ("OSO") A1 and Prime-1, respectively.

DETAILED CREDIT DISCUSSION

Interest Rate Modes and Payment

The Bonds will initially bear interest in a weekly rate mode with interest to be paid on the first business day of each month. The resolution permits conversion of the Bonds, in whole or in part, to a daily, flexible, monthly, index floating, quarterly, semiannual, multiannual, or fixed rate mode. Moody's ratings only apply, however, to Bonds bearing interest in the weekly and daily interest rate modes. The daily interest rate mode also pays interest on the first business day of each month.

Additional Bonds

The resolution does not permit the issuance of additional bonds.

Flow of Funds

The trustee is instructed to draw under the letter of credit by 4:00 p.m. on the business day prior to the payment date in order to receive funds sufficient by 1:00 p.m. on the payment date to pay the principal, and interest accrued thereon, when the same becomes due. The trustee is also instructed to draw under the letter of credit in accordance with its terms to receive in immediately available funds by 2:45 p.m. on each purchase date the purchase price to the extent remarketing proceeds are insufficient. Bonds which 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 confirmation from the Bank stating that the letter of credit has been reinstated in the amount of the purchase price drawn for such Bonds. (All times refer to local time in effect in New York, New York).

Direct Pay Letter Of Credit

The letter of credit provided by the Bank is sized for the full principal amount plus fifty-one days of interest at a rate of 8%, the maximum rate on the Bonds. The letter of credit provides sufficient coverage for the Bonds while they bear interest in the weekly and daily interest rate modes only. 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 or interest received by the Bank at or before 4:00 p.m. on a business day will be honored by 1:00 p.m. on the next business day. Conforming draws for purchase price received by the Bank at or before 12:15 p.m. on a business day will be honored by 2:45 p.m. on the same business day. (All times refer to local time in effect in New York, New York).

Reinstatement of Interest Draws

Draws made under the letter of credit for interest shall be automatically reinstated on the opening of business on the fifth calendar day from the date of such drawing unless the trustee receives notice from the Bank by 5:00 p.m. on the fourth calendar day that the letter of credit will not be reinstated. If the trustee receives from the Bank notice of non-reinstatement of the interest portion of the letter of credit, the Bonds are subject to mandatory tender. The trustee shall cause such mandatory tender on the second business day prior to the termination date of the letter of credit. (All times refer to local time in effect in New York, New York).

Reimbursement Agreement Defaults

In the event of a default under the reimbursement agreement, the Bank may, at its option, deliver written notice to the trustee stating that such event of default under the reimbursement agreement has occurred and direct the trustee to cause a mandatory tender of the Bonds. With direction to cause a mandatory tender, the Bonds shall be subject to mandatory tender on the second business day prior to the termination date of the letter of credit. The letter of credit will terminate fifteen days following the trustee's receipt of notice from the Bank specifying the occurrence of an event of default under the reimbursement agreement directing the trustee to cause a mandatory tender of the Bonds.

Expiration / Termination of the Letter Of Credit

The letter of credit expires on the earliest to occur of: (i) the stated expiration date of the letter of credit, June 30, 2014; (ii) the earlier of (a) the date which is fifteen days following the date on which all of the Bonds have been converted to bear interest at a rate other than the daily or weekly rate, or (b) the date on which the Bank honors a draw on the letter of credit on or after such conversion ; (iii) the date the Bank receives notice from the trustee stating that (a) no Bonds remain outstanding, (b) all required draws on the letter of credit have been made and honored, or (c) an alternate letter of credit has been issued to replace the existing letter of credit; (iv) the date on which a final drawing under the letter of credit is honored by the Bank; or, (v) the date which is fifteen days following the trustee's receipt of notice from the Bank specifying the occurrence of an event of default under the reimbursement agreement directing the trustee to cause either a mandatory tender of the Bonds.

Substitution

The resolution permits the substitution of the letter of credit. The Bonds are subject to a mandatory tender on the substitution date. The trustee shall not surrender the existing letter of credit for cancellation until all required draws have been made and honored.

Optional Tenders

Bondholders may, at their option, tender their Bonds during the weekly rate mode, on any business day by providing written notice to the trustee, tender agent and remarketing agent at least seven days prior to the purchase date. Bondholders may, at their option, tender their Bonds during the daily rate mode on any business day with notice delivered to the trustee, tender agent, and remarketing agent by 11:00 a.m. on the purchase date. (All times refer to local time in effect in New York, New York).

Mandatory Purchases

The Bonds are subject to mandatory tender on the following dates: (i) on each interest rate mode conversion date; (ii) on any business day not later than the twentieth day after which the trustee and remarketing agent received notice from North Texas Tollway Authority of (a) its voluntary termination of the liquidity agreement or credit facility and (b) its intention not to obtain an alternate liquidity agreement or credit facility in replacement thereof; (iii) on the fifth business day prior to the expiration of the liquidity agreement or credit facility; (iv) on a business day not later than the fifteenth calendar day, but in no event later than the second business day prior to the termination date of the liquidity agreement or credit facility, after which the trustee has received notice from the liquidity or credit provider of a termination event or event of default under the liquidity agreement or reimbursement agreement, as applicable, causing the liquidity agreement or credit facility to terminate (v) on the substitution date of an alternate liquidity agreement or credit facility; and (vii) on any date on which the Bonds would be subject to redemption upon not less than fifteen day's prior written notice to bondholders.

WHAT COULD CHANGE THE RATING-UP

Long-Term: The long-term rating on the Bonds could be raised if the long-term 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 could be lowered if the long-term OSO rating on the Bank was downgraded.

Short-Term: The short-term rating on the Bonds could be lowered if the short-term OSO rating on the Bank was downgraded.

KEY CONTACTS:

Trustee: Wells Fargo Bank, N.A.

Underwriter: Morgan Stanley & Co. Incorporated

PRINCIPAL METHODOLOGY USED

The principal methodology used in this rating was Moody's Methodology for Rating U.S. Public Finance Transactions Based on the Credit Substitution Approach (August 2009).

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

Ian Rogow
Analyst
Public Finance Group
Moody's Investors Service

Michael J. Loughlin
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 ASSIGNS A1/VMIG 1 LETTER OF CREDIT-BACKED RATING TO THE NORTH TEXAS TOLLWAY AUTHORITY SYSTEM FIRST TIER VARIABLE RATE REVENUE REFUNDING BONDS, SERIES 2011A.
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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