Fitch Affirms New York Counties Tobacco Trust III, Series 2003

NEW YORK--(Business Wire)--
Fitch Ratings affirms three current interest turbo term bonds from New York
Counties Tobacco Trust III series 2003, as follows:

--$24,115,000 due June 1, 2027 at 'BBB+', Outlook Stable;

--$15,175,000 due June 1, 2033 at 'BBB+', Outlook Stable;

--$40,390,000 due June 1, 2043 at 'BBB+', Outlook Stable.

The affirmations are based on the level of stress each class is able to
withstand as indicated by Fitch's new breakeven cash flow model. The model
indicates, for each class of bonds, the level of the annual Master Settlement
Agreement (MSA) payment percent change the trust would be able to sustain and
still pay the bond in full by the legal final date. The base case 'B'
corresponds to a 1% increase in the MSA payment received by the trust every
year. The 'BBB' category corresponds to an annual MSA payment decline of 1.25%.
The cash flow model accounts for the amount of the latest reported MSA payment
that the transaction has received, the capital structure, the reserve account,
and the bonds' legal final dates.

The bond payments are also tied to the tobacco companies making MSA payments.
Tobacco settlement bonds can be rated up to 'BBB+' based on Fitch's view of the
whole tobacco industry and the executory nature of the MSA. In the event of a
bankruptcy of a tobacco company, Fitch believes there is an incentive for the
company to continue to make payments under the MSA.

Although the delinked ratings of the turbo bonds suggested by the model are 'A',
the bonds are being affirmed at the cap rating of 'BBB+' with a Stable Outlook.

New York Counties Tobacco Trust III bonds are secured by the pledged payments
made under the MSA. The pledged payments consist of New York's share of
perpetual annual payments and strategic contribution payments by the original
participating manufacturers (OPMs) and subsequent participating manufacturers
(SPMs). The OPMs at the time of the original agreement were Philip Morris USA,
Inc.; R.J. Reynolds Tobacco Company; Brown & Williamson Tobacco Corporation; and
Lorillard Tobacco Company. The amount of annual MSA payments received by the
trust are mainly affected by the tobacco consumption level and inflation rate,
as well as state specific adjustments, as specified in the MSA.

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
Aoto Kenmochi, +1-212-908-0867
Cynthia Ullrich +1-212-908-0609
Stefanie Leung, +1-212-980-0826 (New York)
or
Media Relations:
Sandro Scenga, +1 212-908-0278 (New York)
sandro.scenga@fitchratings.com

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