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PRESS RELEASE: Moody's Affirms P-1 Letter Of Credit-Backed Rating On The Los Angeles County Metropolitan Transportation Authority Second Subordinate Sale Tax Revenue Commercial Paper Notes, Series A-T-Bb And Series A-Te-Bb

Tue, 29th Jun 2010 21:52

The following is a press release from Moody's Investors Service: $350 MILLION MAXIMUM PROGRAM SIZE. THE RATING IS BASED ON A SUBSTITUTE LETTER OF CREDIT PROVIDED BY BARCLAYS BANK PLC. Los Angeles County Metro. Transp. Auth., CA Barclays Bank PLC Fully Supported California NEW YORK, June 29, 2010 -- Moody's has affirmed the rating of P-1 on the Los Angeles County Metropolitan Transportation Authority Second Subordinate Sales Tax Revenue Commercial Paper Notes, Series A-T-BB and Series A-TE-BB (the Notes) in conjunction with the substitution of the letters of credit currently provided by Dexia Credit Local and BNP Paribas with a new direct pay letter of credit (LOC) provided by Barclays Bank PLC (the Bank) on the effective date of the substitute letter of credit. The rating on Series A-T-BB and Series A-TE-BB reflects the credit quality of the Bank, and a transaction structure which ensures timely payment of principal and interest when due. The rating will expire upon the stated expiration date of the letter of credit (January 31 , 2012) or upon any earlier termination of the letter of credit. The Series A commercial paper program is being redesignated into subseries to reflect dedicated banks for each subseries as well as whether each subseries is taxable or tax-exempt. Barclays Bank PLC is rated Aa3 for long-term bank deposits and P-1 for short-term bank deposits by Moody's. THE COMMERCIAL PAPER NOTES The substitution of the letters of credit is being accomplished in accordance with the First Supplemental Subordinate Trust Agreement, dated January 1, 1991, which authorizes the substitution of the letter of credit at any time and requires prior written confirmation from each rating agency then rating the Notes that the current rating on the Notes will not be reduced or withdrawn as a result of a substitution. The Trustee, U.S. Bank N.A., will issue Notes upon receipt of issuance instructions from either the issuer, Los Angeles County Metropolitan Transportation Authority, or the commercial paper dealers (Barclays Capital, Goldman, Sachs & Co. and RBC Capital Markets) upon behalf of the Authority. Each Note will be of a denomination equal or greater than $100,000; will mature no more than 270 days from issuance, and in no event can mature later than the fifth day prior to the termination date of the letter of credit. The Notes may be interest bearing or issued at a discount. The maximum program size is $350 million principal of Notes. The LOC is currently sized for $137.77 million of principal plus 270 days' interest at a maximum rate of 12%. No Notes may be issued if such issuance would cause the aggregate principal amount of Notes outstanding, including Notes at maturity if issued at a discount, plus accrued interest to exceed the amount provided for under the letter of credit.. The Trustee is required to draw on the letter of credit to make all payments of principal and interest when due at maturity. The Notes are not subject to redemption prior to maturity. The letter of credit bank will be reimbursed for each draw with the proceeds from the sale of rollover notes, or with funds from the Authority. LETTER OF CREDIT The letter of credit covers full principal plus 270 days of interest at the maximum rate of 12%, and will be available to make payments of principal plus accrued interest on the Notes. Conforming draws for the payment of principal and interest received by the Bank by 11:30 a.m., New York time, on a business day, will be honored by 2:30 p.m., New York time, on the same business day. The LOC will be automatically reinstated upon receipt by the Bank of reimbursement proceeds from the Trustee, unless the Trustee receives a notice from Bank of the occurrence of an event of default under the Reimbursement Agreement with instructions to cease issuing Notes or to make a final drawing for all Notes outstanding (a Final Drawing Notice). Immediately following receipt of a final drawing notice, the Trustee shall draw on the LOC for all Notes outstanding and shall apply the same to the payment of principal and interest on the Notes as such Notes mature. The LOC expires on the earliest of (i) the stated expiration date, January 31, 2012; (ii) the date the Bank receives notice from the Trustee that all outstanding Notes have been paid in full, (iii) the date the Bank receives notice from the Trustee that a substitute LOC has been accepted and all required drawings have been honored, (iv) the date the Bank receives notice from the Trustee that the Authority voluntarily terminates the LOC, (v) the date which is 10 days following the Trustee's receipt of a final drawing notice, and (vi) the date the Bank honors a draw on the LOC in conjunction with Trustee's receipt of a final drawing notice. The letter of credit is subject to the International Standby Practices 1998, International Chamber of Commerce Publication No. 590 (the ISP98) as written. METHODOLOGY The principal methodology used in rating this issue was Moody's Rating Methodology on Letter of Credit Supported Municipal Commercial Paper Transactions, published in December 2008 which is available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. The last rating action occurred on July 12, 2005, when the P-1 rating on the Notes was confirmed. ANALYSTS: Coby Kutcher, Analyst, Public Finance Group, Moody's Investors Service Robert Azrin, Senior Credit Officer, Public Finance Group, Moody's Investors Service CONTACTS: Journalists: (212) 553-0376 Research Clients: (212) 553-1653 Copyright 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of (MORE TO FOLLOW) Dow Jones Newswires June 29, 2010 16:52 ET (20:52 GMT)

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