Fitch Rts $107.5MM Massachusetts Port Auth Multi-Modal Rev Rfdg Bds, Ser 2010-D 'AAA/F1+'

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns a rating of 'AAA/F1+' to the $107,505,000 multi-modal revenue refunding bonds, series 2010-D, issued by Massachusetts Port Authority (Authority). The long-term rating is determined using Fitch's dual-party pay criteria and is based jointly on the underlying rating assigned to those bonds by Fitch (currently rated 'AA' with a Stable Outlook), and the support provided by the letter of credit (LOC) issued by Bank of America, N.A. (BofA; rated 'A+/F1+' with a Stable Outlook). The short-term 'F1+'' rating is based solely on the LOC. For information about the underlying credit rating see the press release dated July 14, 2010 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 BofA and the Authority which results in a long-term rating of 'AAA' for the bonds. If either the underlying bond rating or the BofA 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 BofA rating and the underlying bond rating.

BofA is obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The ratings will expire upon the earliest of: (a) Aug. 12, 2013, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion to a term rate mode; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 50 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds while bearing interest in other than a term rate mode. The Remarketing Agent for the bonds is J.P. Morgan Securities Inc. The bonds are expected to be delivered on or about Aug. 12, 2010.

The bonds initially bear interest at a weekly rate, but may be converted to a daily, term or commercial paper rate. While bonds bear interest in the daily and weekly rate modes, interest payments are on the first business day of each month, commencing Sept. 1, 2010. The tender agent is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held uninvested, and are free from any lien prior to that of the bondholders. Holders may tender their bonds on any business day, provided the tender agent and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) on interest mode conversion dates; (2) on the business day following the last day of a commercial paper or term rate mode; (3) upon expiration, substitution or termination of the LOC; (4) following receipt of written notice from BofA of an event of default under the reimbursement agreement; and (5) following receipt of notice from BofA that the interest component will not be reinstated and directing such mandatory tender. Optional redemption provisions apply to the bonds. There are no provisions for the issuance of additional bonds.

Bond proceeds will be used to refund a portion of the Authority's outstanding revenue bonds.

Applicable criteria available on Fitch's website at www.fitchratings.com: 'U.S. Municipal Structured Finance Rating Criteria', Dec. 17, 2009; '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', June 11, 2009.

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

Related Research:

U.S. Municipal Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=492084

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=447146

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.

CONTACT:

Fitch Ratings, New York
Mary Jane Ziga, 212-908-0529
Seth Lehman, 212-908-0755 (Authority)
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:   Professional Services  Banking

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