New York, January 16, 2009 -- Moody's Investors Service has taken rating actions on 63 classes of tobacco
settlement bonds sponsored by certain New York counties. These
bonds are backed by varying percentages of payments under the Master Settlement
Agreement (MSA) that are owed by tobacco manufacturers to the State of
New York and are shared with its counties.
On November 25, 2008, Judge Alvin K. Hellerstein,
of the district court in the Southern District of New York in the Second
Circuit, issued his preliminary bench ruling on the merits for Freedom
Holdings, et al v. Cuomo, et al: the plaintiffs
had failed to make a claim. The judge finalized his preliminary
decision in a written opinion issued on January 12, 2009.
The judge dismissed the plaintiffs' claims on all counts and dissolved
the preliminary injunction preventing New York from repealing the Allocable
Share Release Clause in its Escrow Statute. This favorable ruling
for the defendants (the attorney general and the commissioner of taxation
and finance of the State of New York) is a positive development for the
tobacco settlement bonds sponsored by the New York counties. As
a result of this positive development, Moody's has removed
its one notch ratings distinction between bonds sponsored by states or
governmental authorities located within the Second Circuit and in other
federal circuits. However, like all other tobacco settlement
bonds rated by Moody's, the bonds sponsored by the New York
counties are under review with direction uncertain because of the risks
associated with other legal challenges to the MSA and related legislation.
The rating actions on the New York counties sponsored tobacco deals are
based on the favorable Freedom Holdings ruling and the review of paydown
trends on the bonds to date. These transactions, with exception
of New York Counties Tobacco Trust III, Series 2003, benefit
from a super sinker fund structure that acts as a partial turbo structure
that uses a portion of available cash to retire term bond principal.
The New York Counties Tobacco Trust III, Series 2003 has a full
turbo structure. The super sinker fund and turbo features accelerate
the payment of outstanding principal and decrease the risk of bond default.
By accelerating the reduction of principal the actual amount of
interest payable currently due is less than the amount on the expected
amortization schedule. This results in each transaction having
a slightly higher rated debt coverage ratio then expected at closing.
Other methodologies and factors that may have been considered in the process
of rating this issue can also be found at www.moodys.com
in the Credit Policy & Methodologies directory.
Complete rating actions are as follows:
Issuer: New York Counties Tobacco Trust I, Series 2000
Serial Bond Class 8, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 9, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 10, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 11, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 12, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 13, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 14, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Term Bond 1, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Flex. Amort. Term Bond 2, Upgraded to Baa3 and Placed
Under Review Direction Uncertain; previously on 4/21/2004 Downgraded
to Ba1 and Placed Under Review Direction Uncertain
Flex. Amort. Term Bond 3, Upgraded to Baa3 and Placed
Under Review Direction Uncertain; previously on 4/21/2004 Downgraded
to Ba1 and Placed Under Review Direction Uncertain
Flex. Amort. Term Bond 4, Upgraded to Baa3 and Placed
Under Review Direction Uncertain; previously on 4/21/2004 Downgraded
to Ba1 and Placed Under Review Direction Uncertain
Issuer: New York Counties Tobacco Trust II, Series 2001
Serial Bond Class 4, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 5, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 6, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 7, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 8, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 9, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 10, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 11, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Super Sinker Term Bond 1, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Super Sinker Term Bond 2, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Super Sinker Term Bond 3, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Issuer: New York Counties Tobacco Trust III, Series 2003
2003 TTB-1, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
2003 TTB-2, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
2003 TTB-3, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Issuer: Niagara Tobacco Asset Securitization Corporation,
Series 2000
Serial 9, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 10, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 11, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 12, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 13, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 14, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 15, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 16, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 17, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 18, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 19, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Serial 20, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Term 3, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Term 4, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Term 5, Upgraded to Baa3 and Placed Under Review Direction Uncertain;
previously on 4/21/2004 Downgraded to Ba1 and Placed Under Review Direction
Uncertain
Issuer: Rensselaer Tobacco Asset Securitization Corporation,
Series A
Serial Bond Class 4, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 5, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 6, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 7, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 8, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 9, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 10, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 11, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Super Sinker Term Bond, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Super Sinker Term Bond 2, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Super Sinker Term Bond 3, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Issuer: Rockland Tobacco Asset Securitization Corporation,
Series 2001
Serial Bond Class 4, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 5, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 6, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 7, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Serial Bond Class 8, Upgraded to Baa3 and Placed Under Review Direction
Uncertain; previously on 4/21/2004 Downgraded to Ba1 and Placed Under
Review Direction Uncertain
Super Sinker Term Bond 1, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Super Sinker Term Bond 2, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Super Sinker Term Bond 3, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Issuer: Ulster Tobacco Asset Securitization Corporation, Series
2001
Term CI Bond-1, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Term CI Bond-2, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Term CCA Bond-1, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
Term CCA Bond-2, Upgraded to Baa3 and Placed Under Review
Direction Uncertain; previously on 4/21/2004 Downgraded to Ba1 and
Placed Under Review Direction Uncertain
For more information please see www.moodys.com.
New York
Navneet Agarwal
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Jayesh Joseph
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's takes action on seven New York counties tobacco settlement deals