2008-04-24 23:57:19 -
- Fitch Ratings assigns ratings to the $499,105,000 Orlando-Orange County Expressway Authority (OOCEA), FL, variable rate revenue refunding bonds, series 2008B bonds, comprised of four subseries based on direct-pay letters of credit (LOCs) supporting the bonds and the application of Fitch's joint probability methodology. The ratings assigned to each subseries are as follows: the $131,025,000 subseries 2008B-1 bonds are rated
'AAA/F1+'; the $118,500,000 subseries 2008B-2 bonds are rated 'AA/F1+'; the $149,760,000 subseries 2008B-3 bonds and the $99,820,000 subseries 2008B-4 bonds are rated 'AA+/F1+'. The long-term rating assigned to each subseries is based jointly on the underlying rating assigned to OOCEA (currently rated 'A' by Fitch) and the support provided by the LOCs issued by:
--Bank of America, National Association, for subseries 2008B-1 bonds, (Bank of America is currently rated 'AA/F1+' by Fitch. The 'AA' long-term component of the rating of BofA is on Rating Watch Negative, as of March 7, 2008);
--SunTrust Bank for subseries 2008B-2, (SunTrust Bank is currently rated 'A+/F1+' by Fitch. The 'A+' long-term component of the rating of SunTrust Bank is on Rating Watch Negative, as of March 7, 2008);
--Wachovia Bank, N.A. for subseries 2008-3 and subseries 2008B-4, (Wachovia Bank, N.A. is rated 'AA-/F1+' by Fitch).
The short-term rating 'F1+' rating assigned to the bonds is based solely on the LOCs. The ratings will expire on the earliest of: May 14, 2011, the stated expiration date of the LOCs, unless such date is extended; any prior termination of the LOCs; or the defeasance of the bonds.
The long-term ratings are based on Fitch's methodology which considers the joint probability of the failure of both a rated obligor and a bank LOC provider. The methodology results in a rating that may be one or two notches higher than the stronger of the two entities: a low correlation results in a rating two notches higher than the stronger of the two credits; while a medium correlation results in a rating one notch higher. In addition, the following conditions must be met: (1) both entities have a rating of 'A' or higher; (2) the transaction is structured such that payments from both the municipal issuer and the bank are in the flow of funds and both entities would have to fail to perform before the bonds defaulted; and (3) the credit of the bank and the rated obligor have no more than a medium degree of correlation. In this instance, Fitch has determined that there is a low degree of correlation between each respective bank and OOCEA and the long-term ratings assigned to each subseries of bonds represent a two-notch increase above the higher of the two credits. If either the long-term rating of OOCEA or a respective bank's rating were to be downgraded to 'A-' or lower, the joint probability methodology could no longer be applied and the long-term rating would be changed to reflect the higher of the bank and the issuer's rating.
The banks are obligated to make payments of principal and interest on the bonds when due as well as purchase price for tendered bonds. The LOCs provide full coverage of principal, plus an amount equal to 35 days' interest at a maximum rate of 12%, based on a year of 365 days, and purchase price for tendered bonds, while in the daily or weekly rate modes. The bonds initially bear interest at a weekly interest rate, but may be converted to a daily, commercial paper, term or fixed interest rate mode, in accordance with the terms of the documents. While bonds bear interest in the weekly rate mode, interest payments are paid on the first business day of each month, commencing June 2, 2008. Holders may tender their bonds on any business day with seven days' prior notice to the tender agent and remarketing agent. The bonds are subject to mandatory tender on (1) conversion of the interest rate mode, (2) on the purchase date while in the commercial paper rate or term rate modes, and (3) the expiration, termination or substitution of the LOC. Optional and mandatory redemption provisions also apply to the bonds.
The remarketing agents for the bonds are Banc of America Securities LLC for subseries 2008B-1; SunTrust Robinson Humphrey, Inc. for subseries 2008 B-2; Wachovia Bank, N.A. for subseries 2008B-3; and Citigroup Global Markets Inc. for subseries 2008B-4. The bonds are expected to be delivered on or about May 1, 2008.
The latest report on OOCEA, dated March 3, 2008 may be found on Fitch's website at www.fitchratings.com.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings, New York
Trudy Zibit, +1-212-908-0689
(for information on the series 2004B bonds)
Chad Lewis, +1-212-908-0886
(for information on OOCEA)
Cindy Stoller, +1-212-908-0526 (Media Relations)
