2008-04-16 23:33:32 -
- Fitch Ratings assigns a rating of 'AA+/F1+' to the $100,000,000 Raleigh-Durham Airport Authority (North Carolina) Variable Rate Airport revenue refunding bonds series 2008B. The long-term 'AA+' rating is based jointly on the long-term 'AA-' rating assigned by Fitch to the Raleigh-Durham Airport Authority and the support provided by an irrevocable, direct-pay letter of credit (LOC) issued by Wachovia Bank,
National Association (rated 'AA-/F1+' by Fitch) securing the bonds. The short-term 'F1+' rating is based solely on the LOC. The bank is obligated to make payments of principal, interest and purchase price when due. The rating on the bonds will expire upon the earliest of: Apr. 30, 2011, the expiration date of the LOC, unless extended; any prior termination of the LOC; or defeasance of the bonds.
The long-term 'AA+' rating is based on Fitch's methodology which considers the likelihood 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 credits, depending upon the level of correlation between 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 a no more than a medium degree of correlation. In this instance the degree of correlation resulted in a rating which is two notches higher than the stronger of the two credits. If either Raleigh-Durham Airport Authority or Wachovia Bank, National Association were to be downgraded to 'A-' or lower, the joint probability methodology would no longer be applicable.
The LOC provides full coverage of principal plus an amount equal to 35 days of interest computed at a maximum rate of 12%, based on a year of 365 days, and purchase price for tendered bonds. The rating will expire on the earliest of: (i) Apr. 30, 2011, the stated expiration date of the LOC, unless such date is extended; (ii) any prior termination of the LOC; or (iii) the defeasance of the bonds. The Series 2008B bonds are expected to be available for delivery on or about May 1, 2008. The remarketing agent for the Series 2008B is Wachovia Securities.
The bonds will bear interest in a weekly rate mode, but may be converted to a daily, bond interest term or long-term interest rate. 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 and bondholders have the option to tender their bonds on any business day, with the requisite prior notice. The bonds are subject to mandatory tender on (1) conversion of the interest rate mode, (2) on the day next succeeding the last day of each bond interest term, and (3) the expiration, termination or substitution of the LOC or upon the occurrence of an event of default under the LOC Reimbursement Agreement directing the Trustee to cause a mandatory tender of the Bonds.
Optional and mandatory redemption provisions also apply to the bonds.
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
Linda Friedman, +1-212-908-0689
(Series 2008B bonds, New York)
Peter Stettler, +1-312-368-3176
(Raleigh-Durham Airport Authority, Chicago)
Cindy Stoller, +1-212-908-0526
(Media Relations, New York)
