OREANDA-NEWS. On the effective date of Oct. 29, 2015, Fitch Ratings will downgrade to 'F1' from 'F1+' the short-term rating assigned to the New York City Municipal Water Finance Authority water and sewer system revenue bonds, adjustable rate fiscal 2003 series F-2 bonds (the bonds). The rating action is in connection with the substitution of the standby bond purchase agreement currently provided by Bayerische Landesbank (guaranteed obligations) (rated 'AAA/F1+', Stable Outlook) with a substitute irrevocable direct-pay letter of credit (LOC) to be provided by Citibank, N.A. (rated 'A+/F1', Stable Outlook) for the bonds.


The short-term 'F1' rating will be based on the liquidity support provided Citibank, N.A., in the form of a LOC, which has a stated expiration date of Oct. 26, 2018, unless extended or earlier terminated, during the daily, two-day rate and the weekly rate modes. The substitute LOC does not cover scheduled principal and interest payments. The long-term 'AA+', Stable Outlook rating currently assigned to the bonds continues to be based on the rating assigned by Fitch to the water and sewer system revenue bonds for the New York City Municipal Water Finance Authority. For more information on the long-term rating of New York City Municipal Water Finance Authority, see the press release dated May 15, 2015 on Fitch's website at www.fitchratings.com.

The substitute LOC provides for the payment of the principal component of purchase price plus an amount equal to 35 days of interest at the maximum rate of 9%, based on a year of 365 days for tendered bonds during the daily, two-day rate and weekly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The substitute LOC will expire on Oct. 26, 2018, unless such date is extended, upon conversion to a mode other than the daily, two-day rate and weekly rate modes; or upon the occurrence of certain events of default which result in a mandatory tender. The remarketing agent for the bonds is US Bank.

The short-term ratings reflect the short-term rating that Fitch maintains on the bank providing liquidity support, and will be adjusted upward or downward in conjunction with the short-term rating of the bank.