Fitch Rates New Hampshire Muni Bond Bank 1978 Resolution Bonds 'AAA'; Outlook Stable

CHICAGO--(Business Wire)--
Fitch Ratings has assigned an 'AAA' rating to the New Hampshire Municipal Bond
Bank's (NHMBB) approximately $27.95 million, 2009 series D non-guaranteed bonds,
issued under the 1978 General Bond Resolution. The 2009D bonds are scheduled to
sell via competitive bid on July 14, 2009. NHMBB will loan the proceeds to
Governor Wentworth Regional School for capital improvements. In addition, Fitch
has affirmed the 'AAA' rating on the NHMBB's $663.8 million outstanding 1978
general bond resolution debt. The Rating Outlook is Stable.

The 'AAA' rating and Stable Outlook on the 1978 resolution bonds are based on
significant coverage from multiple layers of security, strong legal provisions,
and a diversified general obligation loan portfolio of 164 borrowers from
cities, towns, counties, school districts, and other local governments
throughout the state. All loans are backed by the borrowers' general obligation
pledge. The reserve fund, which is sized at 100% of maximum annual debt service,
is funded with bond proceeds and invested in U.S. treasury and agency
securities. As of Jan. 31, 2009, pledged reserves totaled $102 million, or 16%
of bonds outstanding.

Loan repayments are further backed by an intercept mechanism for any state funds
payable to borrowers. The bonds are also supported by a state moral obligation
to replenish the debt service reserve fund if it falls below its minimum
specified level. Neither the intercept nor the moral obligation has ever been
utilized, because no borrower has defaulted on a loan repayment since the bond
bank began operations in 1977. Most of New Hampshire's eligible municipalities
use the bond bank as their primary borrowing vehicle, because it provides the
lowest cost of capital.

The loan portfolio is diverse with the largest borrower, Exeter Region
Cooperative School District, comprising 6% of the portfolio. The top 10
borrowers account for 44% of the total outstanding loan balance. Approximately
71% of the loans are to school districts, each of which receives an allocation
of the state property tax and many of which also receive 'adequate education
grants' from the state. Loan payments are due five days before the bond payment
dates. NHMBB could charge borrowers 12% interest if a payment were late.

Fitch analyzed the default tolerance of the NHMBB loan pool using a stress test
it also applies to state revolving funds and other municipal loan pools. The
stress test considers loan quality, single risk concentration, reserve fund
size, and debt service requirements. The bond bank's reserve fund is sufficient
to pay debt service even if scheduled loan repayments fall short by as much as
24.6% for four consecutive years and no action is taken by the state to
replenish the reserve fund. A loan repayment shortfall this severe is consistent
with what Fitch would expect to occur in an 'AAA' stress scenario, given the
sound quality of the bond bank's loan pool.

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
Adrienne M. Booker, 312-368-5471 (Chicago)
Karen Krop, 212-908-0661 (New York)
Media Relations:
Cindy Stoller, 212-908-0526 (New York)
cindy.stoller@fitchratings.com

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