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Rating Action:

Moody's affirms A2 of Texas Muni. Gas Acquisition & Supply Corp. I Gas Supply Revenue Bonds, Series 2006A, 2006B & 2008D

14 Jun 2019

New York, June 14, 2019 -- Moody's Investors Service has affirmed the A2 rating of Texas Municipal Gas Acquisition & Supply Corporation I Gas Supply Revenue Bonds, Series 2006A, Series 2006B & Series 2008D (collectively the Bonds).

The affirmation is in conjunction with the replacement of the current repurchase agreement (repo) provided by Depfa Bank plc with an investment agreement provided by Bank of America, N.A. effective June 28, 2019. The investment agreement is for the investment of the debt service funds for the Bonds.

Upon the effective date of the replacement, the rating on the Bonds will be based upon the credit quality of (i) Bank of America Corporation (BAC) (A2) as guarantor under the gas purchase agreement, back-end commodity swap, funding agreement and interest rate swap and (ii) Bank of America, N.A. (Aa2 deposit rating) as investment agreement provider.

FACTORS THAT COULD LEAD TO AN UPGRADE

» Upgrade of the long-term rating of BAC's senior unsecured obligations.

» Upgrade of the long-term deposit rating of Bank of America, N.A..

FACTORS THAT COULD LEAD TO A DOWNGRADE

» Downgrade of the long-term rating of BAC's senior unsecured obligations.

RATINGS RATIONALE

Previously, Moody's did not consider the rating of Depfa Bank plc as material to the rating on the Bonds. This was due to the fact that in August 2011, (i) the DEPFA repo was amended with regards to sources of collateral and collateral levels and (ii) Moody's received legal opinions to the effect that the collateral posted pursuant to the terms of the repo would not be subject to automatic stay should Depfa Bank plc become insolvent. As a result of the replacement however, the rating of Bank of America, N.A. will be considered as material to Moody's rating on the Bonds.

Separately, there is a Deutsche Bank Securities Inc. (DBSI) repo which contains the reserve funds for the Bonds. The rating of DBSI is not considered as material to Moody's rating on the Bonds. This is due to the fact that the repo was amended and restated in August 2012. The amendments were to address issues on sources of collateral, collateral levels and custodian requirements. Moody's received legal opinions to the effect that the collateral posted pursuant to the terms of the repo would not be subject to automatic stay should DBSI become insolvent. The funding agreement (guaranteed by BAC) which covers the debt service reserve fund for the 2008D Bonds, also provides coverage for any general deficiency up to $5 million that can be drawn on to fully fund accounts required for any series of Bonds. The combination of the amendments to the DBSI repo and the $5 million available under the funding agreement results in the DBSI repo not being considered material to the rating on the Bonds.

The principal methodology used in these ratings was Gas Prepayment Bonds published in March 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Joann Hempel
VP - Senior Credit Officer
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Chandra Ghosal
VP-Senior Analyst/Manager
Public Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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