Fitch Rates $49MM Cleveland, Ohio, Airport Revs Series 2009D 'AA-/F1'

Dépèche transmise le 19 août 2009 par Business Wire

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned a rating of 'AA-/F1' to the $49,025,000 City of Cleveland, Ohio (City), airport system revenue bonds, series 2009D. The 'AA-' long-term component of the rating is based jointly on the rating that Fitch has assigned to the City's airport system revenue bonds (currently rated 'A' by Fitch) and the irrevocable direct-pay letter of credit (LOC) provided by KBC Bank N.V. (currently rated 'A/F1' by Fitch). (For information about the basis for the long-term component of the rating, see the criteria report entitled 'Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds' dated June 11, 2009 available on Fitch's web site at www.fitchratings.com.) The 'F1' short-term component of the rating is based solely on the LOC.

The long-term 'AA-' rating assigned to the bonds is based on Fitch's methodology that considers the joint likelihood of the failure of both a municipal issuer 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 municipality 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 the bonds. If either the rating assigned to the City's airport system revenue bonds or the rating assigned to the bank were downgraded to 'A-' or lower, the joint methodology would no longer be applicable and the long-term rating assigned to the bonds would reflect the higher of the two ratings.

Pursuant to the LOC, the bank is obligated to make payments of (1) principal of and interest on the bonds when due and (2) purchase price for tendered bonds while the bonds bear interest in the daily and weekly rate modes. The ratings will expire on the earliest of: (i) July 15, 2011, the LOC expiration date, as may be extended; (ii) any prior termination of the LOC; and (iii) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 46 days of interest at a maximum rate of 12%, based on a 365-day year. Siebert Brandford Shank & Co., LLC is the underwriter and remarketing agent for the bonds. The bonds are expected to be delivered on or about Aug. 27, 2009.

The bonds initially bear interest in the weekly rate mode but may be converted to a daily, short-term, long-term or fixed-interest rate mode. While the bonds bear interest in the daily and weekly rate modes, interest is payable on the first business day of each month, commencing Sept. 1, 2009. Holders of bonds bearing interest in a daily or weekly rate mode may tender their bonds for purchase with prior notice. The bonds are subject to mandatory tender: (i) on each interest rate mode conversion date; (ii) on the first day following the last day of each short- or long-term interest rate period; (iii) upon the substitution or expiration of the LOC; and (iv) upon the occurrence of an event of default under the reimbursement agreement or nonreinstatement of the interest component of the LOC after an interest draw. The bonds are also subject to mandatory sinking fund and optional redemption.

Bond proceeds will be used to refund the City's series 2008E airport system revenue 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.

Business Wire

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