Fitch Rts $350MM MTA (NY) Dedicated Tax Fund VRRBs, 2008B-1/B-4 'AA+/F1+'; 2008B-2/B-3...

Fitch Rts $350MM MTA (NY) Dedicated Tax Fund VRRBs, 2008B-1/B-4 'AA+/F1+'; 2008B-2/B-3 'AAA/F1+'

NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'AA+/F1+' to the Metropolitan
Transportation Authority dedicated tax fund variable rate refunding
bonds (VRRBs) subseries 2008B-1 and B-4, and an 'AAA/F1+'rating to
subseries 2008 B-2 and B-3. The ratings are based on the direct-pay
letters of credit (LOCs) supporting the bonds and the application of
Fitch's joint probability methodology. The long-term ratings assigned
to the bonds are based jointly on the underlying rating assigned to
the bonds (currently rated 'A+' by Fitch), and the support provided by
the LOCs issued by Bank of Nova Scotia ($100 million subseries
2008B-1), BNP Paribas ($100 million subseries B-2), Lloyds TSB Bank
($100 million subseries B-3), and KBC Bank ($48.175 million subseries
B-4) (the bank, or banks) securing the bonds. The short-term 'F1+'
ratings are based solely on the LOCs. The banks are rated as follows
by Fitch: Bank of Nova Scotia ('AA-/F1+'), BNP Paribas ('AA/F1+'),
Lloyds TSB Bank ('AA+/F1+'), and KBC Bank ('AA-/F1+'). For more
information on the underlying credit please see the Fitch press
release published on July 30, 2008, available on the Fitch web site at
www.fitchratings.com.

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 is
up to two notches higher than the stronger of the two credits if the
following conditions are 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. Fitch has determined a
low degree of correlation which results in a rating of 'AA+/F1+' for
subseries 2008B-1 and B-4 and an 'AAA/F1+'rating for subseries 2008
B-2 and B-3. If either the underlying bond rating or a bank were
downgraded to 'A-' or lower, the joint probability could no longer be
applied, and the long term rating for the subseries would then be
adjusted to the higher of the bank rating and the underlying bond
rating.

The banks are obligated to make payments of principal of and
interest on the bonds upon maturity and redemption, as well as
purchase price for tendered bonds. The ratings will expire upon the
earliest of: (1) August 5, 2011, the initial stated expiration date of
the related LOCs, unless such date is terminated earlier; (2) any
prior termination of the related LOCs; or (3) defeasance of the bonds.
The LOCs provide full coverage of principal plus an amount equal to 46
days of interest at a maximum rate of 12% based on a year of 365 days,
and purchase price for tendered bonds, while in the weekly or daily
rate modes.

The bonds initially bear interest at a weekly rate, but may be
converted to a daily, commercial paper, term, fixed, or auction rate.
While bonds bear interest in the weekly and daily rate modes, interest
payments are on the first business day of each month, commencing Sept.
2, 2008. Holders may tender their bonds on any business day, provided
the tender agent and remarketing agent are given at least seven
calendar days' prior notice of the purchase in the weekly rate mode,
and notice by 11:00 a.m. New York time on the purchase date, in the
daily rate mode. The bonds are subject to mandatory tender: (1) each
mode change date; (2) upon substitution of the LOC; (3) the business
day immediately following the last day of each commercial paper and
term rate period; (4) the second business day prior to the LOC
expiration date; (5) the fifth calendar day preceding the termination
date specified under the LOC in a bank notice, directing such
mandatory tender; (6) the fifth calendar day following receipt by
trustee of notice from the bank that the LOC will not be reinstated
following an interest draw. Optional and mandatory redemption
provisions also apply to the bonds. The Underwriter and Remarketing
Agent for the bonds is Lehman Brothers. The bonds are expected to be
delivered on or about Aug. 7, 2008.

The series 2008B bonds are being issued to refund $100,000,000 of
series 2004B-3 and $100,000,000 of series 2004B-5 dedicated tax fund
bonds, and $145,000,000 of series 2004D-1 dedicated tax fund bonds, at
the redemption price of 100%.

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
information on the Metropolitan Transportation Authority:
Joseph Staffa, 1-212-908-0829/ Chad Lewis, 1-212-908-0886
Sandro Scenga, 1-212-908-0278 (Media Relations, New York)

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