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Rating Action:

Moody's affirms VMIG 1 on NYC Municipal Water Authority Revenue Bonds, Fiscal 2012 Series B-1- B4

Global Credit Research - 14 Feb 2018

New York, February 14, 2018 -- Moody's Investors Service affirms the VMIG 1 short-term ratings and maintains the Aa1 long-term ratings on the New York City Municipal Water Finance Authority (the Authority) Water and Sewer System Revenue Bonds, Adjustable Rate Fiscal 2012 Series B-1, B-2, B-3 & B-4 (the Bonds).

Moody's has, at the request of the Authority, reviewed the short-term ratings of the Bonds in conjunction with the delivery of (i) an amended and restated standby bond purchase agreement (SBPA or liquidity facility) provided by U.S. Bank National Association for Series B-1; (ii) an amended and restated SBPA provided by State Street Bank & Trust Company (a) for Series B-3 and (b) in substitution for the existing SBPAs for Series B-2 and B-4. U.S. Bank and State Street are collectively the Banks. The delivery of the amended and restated SBPAs are currently scheduled to be effective March 7, 2018.

RATINGS RATIONALE

Upon delivery of the SBPAs the short-term ratings will continue to be derived from (i) the credit quality of the Banks as providers of the SBPAs and (ii) the likelihood of termination of the liquidity facilities without a mandatory tender. Events which would cause the liquidity facilities to terminate without a mandatory purchase of the Bonds are directly related to the credit quality of the Authority. Accordingly, the likelihood of any such event occurring is reflected in the Aa1 long-term rating assigned to the Bonds. The Banks' current short-term counterparty risk assessments are P-1 (cr).

FACTORS THAT COULD LEAD TO AN UPGRADE

- Short-Term: Not applicable

FACTORS THAT COULD LEAD TO A DOWNGRADE

- Short-term: Downgrade of the short-term CR Assessment of the Banks or downgrade of the long-term rating of the Bonds.

The Banks' obligations under the SBPAs can be immediately terminated or suspended as a result of the occurrence of any of the following events: (i) the Authority shall fail to pay principal and interest on the Bonds or on any debt on parity with the Bonds; (ii) the bankruptcy or insolvency of the Authority; (iii) the Authority shall impose a debt moratorium, debt restructuring or comparable extraordinary restriction on repayment of the principal of or interest on the Bonds or any parity debt; or the State or any other governmental authority having jurisdiction over the Authority shall impose a debt moratorium, debt restructuring or comparable extraordinary restriction on repayment of the principal of or interest on the Bonds or all debt obligations of the Authority secured by a lien on Revenues senior to or on parity with the Bonds; (iv) a final, nonappealable judgment shall be issued by a court of competent jurisdiction that the Bonds or any provision of the SBPAs or of the Resolution relating to (A) the payment of principal or interest on any of the Bonds or (B) the pledge of the Revenues supporting the Bonds shall cease for any reason to be valid and binding, or the Authority shall publicly contest that the Bonds or any provision of the SBPAs or of the Resolution relating to (A) the payment of principal or interest on any of the Bonds or (B) the pledge of the Revenues supporting the Bonds is invalid or that the Authority has no liability thereon; (v) the entry or filing of a final and non-appealable judgment in excess of $25 million against the Authority and failure of the Authority to pay or satisfy such judgment within 90 days and (vi) each rating agency rating the Bonds shall assign a rating to any parity debt below investment grade or withdraw or suspend any such rating, in each case, for a credit-related reason.

The Bonds of each series currently bears interest at the weekly rate mode and pays interest on the first business day of each month. The interest rate mode is convertible, in whole by series, to the daily, two-day, flexible, commercial paper, auction or fixed rate mode. Other than for conversion between the daily, weekly and two-day rate modes, upon any other interest rate conversion, the Bonds shall be subject to mandatory tender. The SBPAs cover Bonds in the weekly, daily and two-day rate modes. The short term ratings for the Bonds will expire upon an interest rate conversion to a flexible, commercial paper, auction or fixed rate mode.

Purchase price payments for Bonds tendered but not remarketed will be paid from remarketing proceeds and, to the extent that remarketing proceeds are not available, from a draw made by the tender agent under the applicable SBPA. The SBPAs are to be drawn on by the tender agent by 12:00 p.m. (New York time) on any purchase date to make timely payment of purchase price to the extent that the remarketing proceeds on deposit are insufficient.

Holders may optionally tender their bonds on any business day (i) during the weekly rate mode with at least seven days prior notice, (ii) during the daily rate mode with notice by 11:00 a.m., New York time and (iii) during the two-day mode with two business days' notice. Such notice shall be delivered to the tender agent and remarketing agent. Bonds which are purchased by the Banks due to a failed remarketing may not be released by the tender agent until the applicable SBPA has been reinstated.

Substitution of the liquidity facilities is permitted under the Supplemental Resolution provided there is a mandatory tender of the Bonds on the effective date of such substitution unless the tender agent receives prior notification from Moody's stating that the rating on the Bonds will not be reduced or withdrawn as a result of such substitution. The Bonds will also be subject to mandatory tender on (i) each interest rate conversion date (other than conversion between the weekly, daily and two-day rate modes); (ii) at the end of each flexible or commercial paper rate period; (iii) the business day preceding the expiration or earlier termination date of the SBPAs; and (iv) the business day preceding the termination date of the SBPAs following the tender agent's receipt of written notice from the Bank that an event of termination has occurred under the SBPA.

The SBPAs, which are sized for the full principal amount of the applicable series of Bonds currently outstanding plus 35 days interest at 9%, the maximum rate for the Bonds, will secure payments of purchase price while the Bonds bear interest in the weekly, daily and two-day rate modes. Under the terms of the SBPAs, conforming draws received by the Banks by 12:00 p.m. will be honored by 2:30 p.m. on the same business day. All times are New York time.

The SBPAs will terminate upon the earliest to occur: (i) the stated expiration dates, March 6, 2021; (ii) the date on which the available commitment of the SBPA is reduced to zero; (iii) the business day following the substitution date of the liquidity facility; (iv) the business day following conversion of all the Bonds to a rate mode other than the daily, weekly or two-day modes; (v) the 30th day following receipt by the tender agent of a notice of termination from the Bank as a result of the occurrence of an event of default under the SBPA; or (vi) the date the SBPA automatically and immediately terminates.

RATING METHODOLOGY

The methodologies used in this rating were Variable Rate Instruments Supported by Conditional Liquidity Facilities published in March 2017 and US Municipal Utility Revenue Debt published in October 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

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.

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
Lead Analyst
Municipal Supported Products
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Michael Loughlin
Additional Contact
Municipal Supported Products
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.
© 2018 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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