Dépêches

Fitch Upgrades Metro Washington Airports Auth Airport System VRBs Ser 2003D-2 to 'AAA/F1+'

Dépèche transmise le 29 juillet 2009 par Business Wire

NEW YORK--(BUSINESS WIRE)--Fitch Ratings upgrades the rating of the $75,000,000 ($69,000,000 currently outstanding) Metropolitan Washington Airports Authority (MWAA), airport system revenue variable-rate bonds series 2003D-2 (the bonds) to 'AAA/F1+' from 'AA/F1'. The rating action is in connection with the substitution of the irrevocable, direct-pay letter of credit (LOC) provided by Regions Bank (currently rated 'A-/F1' by Fitch) supporting the bonds with an LOC provided by Wachovia Bank, National Association. The long-term 'AAA' rating is based upon the application of Fitch's dual-party pay criteria for the subseries 2003D-2 bonds, whereby the long-term rating is based jointly on the Metropolitan Washington Airports Authority (currently rated 'AA') and the support provided by a LOC issued by Wachovia Bank, National Association (Wachovia) (currently rated 'AA-/F1+') securing the bonds. The short-term 'F1+' rating is based solely on the LOC.

The previous rating of the Series 2003D-2 bonds was also based upon Fitch's dual-party pay criteria. However, on June 16, 2009, the long-term rating of Regions Bank was downgraded to 'A-' making the bonds ineligible for application of the dual-party pay methodology. The rating on the bonds should have been downgraded to 'AA/F1' reflecting the long-term rating of MWAA and the short-term rating of Regions Bank. With this release the rating history is now corrected on the Fitch web site.

The long-term 'AAA' rating is based on Fitch's dual-party pay 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 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 a low degree of correlation. In this instance the correlation is low, resulting in a two-notch upgrade. If either the MWAA or the bank were to be downgraded to 'A-' or lower, the dual-party pay methodology would no longer be applicable.

Wachovia is obligated to make payments of principal and interest on the bonds when due, as well as purchase price for tendered bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 34 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) July 30, 2012, 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 remarketing agent for the subseries 2003D-2 is Wachovia Bank, National Association.

The bonds currently bear interest in a weekly rate mode, but may be converted to a daily, flexible, auction, or term interest rate mode. While bonds bear interest in the weekly rate mode, interest payments are paid on the first business day of each month. Bondholders have the option to tender their bonds on any business day, with the requisite prior notice to the remarketing agent and the paying agent. The bonds are subject to mandatory tender on (1) conversion of the interest rate mode, (2) on the repurchase date while in the flexible rate mode, and (3) the expiration, termination or substitution of the LOC. 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.