Dépêches

Fitch to Take Actions on San Francisco Intl Airport, CA 2nd Ser Var-Rate Rev Rfdg Bds, Issue 36C&37C

Dépèche transmise le 12 juillet 2011 par Business Wire

NEW YORK--(BUSINESS WIRE)--On the effective date of July 13, 2011, Fitch Ratings will take various rating actions on the Airport Commission of the City and County of San Francisco, CA San Francisco International Airport second series variable rate revenue refunding bonds as follows:

--$36,145,000 issue 36C long-term rating revised to 'AA+' from 'A+'; short-term 'F1+' rating assigned;

--$89,895,000 issue 37C long-term rating revised to 'AA' from 'A+'; short-term 'F1+' rating assigned.

The Outlook on the long-term rating for both series is Stable.

The rating actions are in connection with the provision of irrevocable direct-pay letters of credit (LOCs) to be issued by U.S. Bank National Association (U.S. Bank, rated 'AA-/F1+', Stable Outlook) which will support the issue 36C bonds and a LOC to be issued by Union Bank, N.A. (rated 'A/F1', Stable Outlook) which will support the issue 37C bonds.

The long-term ratings will be determined using Fitch's dual-party pay criteria and will be based jointly on the underlying rating assigned to those bonds by Fitch (currently rated 'A+', Stable Outlook), and the support provided by the respective LOCs. The short-term ratings will be based solely on the respective LOCs. For information about the underlying credit rating, see Fitch's press release dated June 28, 2011 available at 'www.fitchratings.com'.

Fitch's dual-party pay criteria consider the likelihood of the failure of both a rated obligor and a bank LOC provider. The methodology results in a long-term 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 between U.S. Bank and the obligor and Union Bank and the obligor which results in a rating of 'AA+' for the issue 36C bonds and 'AA' for the issue 37C bonds. If either the underlying bond rating or the bank rating were downgraded to 'A-' or lower, the dual-party pay criteria could no longer be applied, and the long term rating assigned to the bonds would then be adjusted to the higher of the bank rating and the underlying bond rating.

Pursuant to the respective LOCs, the banks will be 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: (a) (i) July 11, 2014, the initial stated expiration date of the U.S. Bank LOC supporting the issue 36C bonds, unless such date is extended, and (ii) July 13, 2015, the initial stated expiration date of the Union Bank LOC supporting the issue 37C bonds, unless such date is extended; (b) conversion of the bonds to an interest rate mode other than the weekly rate; (c) any prior termination of the respective LOCs; and (d) defeasance of the bonds. The LOCs provide full and sufficient coverage of principal plus an amount equal to 51 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 rate mode. A mandatory tender and remarketing of the bonds will occur on the substitution date of July 13, 2011. The Remarketing Agents for the bonds continues to be Bank of America Merrill Lynch for the issue 36C bonds and E. J. De La Rosa & Co. Inc. for the issue 37C bonds.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Rating Criteria', April 25, 2011;

--'Rating Guidelines for Letter of Credit-Supported Bonds', April 29, 2009;

--'Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds', March 10, 2011.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=624129

Rating Guidelines for Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=435132

Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=611525

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