OREANDA-NEWS. S&P Global Ratings lowered its rating on AARP, D. C.'s series 2001 taxable variable rate demand notes to 'AA/A-1' from 'AA+/A-1' and placed the rating on CreditWatch with positive implications. The rating action and CreditWatch placement reflect the scheduled substitution on Aug. 9, 2016, of the existing letter of credit (LOC) provided by JPMorgan Chase Bank N. A with a new LOC provided by Bank of America N. A. (BOA). Because we placed our rating on BOA on CreditWatch with positive implications on Nov. 2, 2015, an increase of the long-term rating component on the bank would result in the raising of the jointly correlated long-term rating assigned to the bonds, to 'AA+/A-1'. The short-term component of the rating will solely reflect the short-term rating on the LOC provider, BOA. The long-term component of the rating reflects the joint support of the LOC provided by BOA and the underlying rating (SPUR) on AARP, the obligor, assuming a medium correlation level. The short-term component of the rating solely reflects our short-term rating on BOA. Pursuant to the terms of the bond documents, the trustee is directed to first pay principal, interest, and the redemption price from amounts received from draws made on the LOC. If the LOC bank fails or refuses to honor a draw, the trustee is directed to pay such principal and interest from funds held by the trustee; in the event such funds are insufficient to make the payments in full, the trustee is directed to make a demand to AARP to pay the deficiency. The new LOC continues to cover the entire principal amount and accrued interest for 35 days at the maximum rate of 12% for bonds bearing interest in the weekly interest rate mode, and the purchase price of bonds not successfully remarketed. The interest component on the LOC reinstates automatically after each draw. Should the trustee receive notice of an event of default under the reimbursement agreement, the trustee will declare a mandatory redemption or acceleration on the bonds, draw under the facility, and use the proceeds to pay the bondholders. Bondholders have the option of tendering their bonds for purchase while in the weekly mode, upon providing the requisite notice. The LOC is scheduled to expire on Aug. 8, 2021, unless earlier terminated or extended pursuant to its terms.